New York Community Bank (NYCB) has signed a deal to buy $38.4 billion assets from Signature Bank – about a third of the total $110 billion in assets the bank held last week when it was seized by the Federal Deposit Insurance Corporation (FDIC).
Flagstar Bank, a subsidiary of NYCB, assumed substantially all of Signature Bank’s deposits, some of its loan portfolios and all 40 of its former branches, according to the FDIC. Roughly $60 billion of Signature Bank’s loans and $4 billion of its deposits are to remain with the agency in receivership.
The collapse of the bank is expected to cost the FDIC about $2.5 billion. Under the deal, Flagstar Bank will buy $12.9 billion in Signature Bank loans at a discount price of just $2.7 billion.
The 40 branches of the Signature Bank became Flagstar Bank, a subsidiary of NYCB, on Monday.
Silicon Valley Bank Purchased
Signature Bank, which had $209 billion in assets, failed at around the same time the Silicon Valley Bank (SVB) collapsed in the second-largest bank failure in US history.
The event sent a tidal wave of anxiety through the stock market and the banking industry amid fears of contagion in global markets.
Billionaire David Tepper has meanwhile purchased the bonds of the SVB Financial Group in anticipation the bank’s debt value will rise as portions of the group are auctioned off, according to the Financial Times.
Credit Suisse Rescued but Shareholders Wiped Out
Across the pond in Europe, Switzerland’s biggest bank, UBS, has agreed to buy out its faltering competitor, Credit Suisse, in a deal brokered by the Swiss National Bank.
“Let us be clear: as far as Credit Suisse is concerned, this is an emergency rescue,” UBS chairman Colm Kelleher told reporters Sunday night.
The central bank said the rescue, which came as the 167-year-old bank was teetering, would “secure financial stability and protect the Swiss economy.”
UBS agreed to pay $3.25 billion for the bank. The price was about 60 percent less than what it was worth when the stock markets closed on Friday, essentially wiping out those who owned $17 billion in the riskier “additional tier one” bonds, Swiss regulators said.