Signature sold to Flagstar, crypto deposits not included

FDIC sold 40 branches of Signature Bank to Flagstar Bank, beginning operations on March 20 under new ownership. Crypto-related deposits, however, aren’t part of the deal.

The Federal Deposit Insurance Corporation (FDIC) announced the deal on March 19. Signature’s buyer is a subsidiary of NY Community Bankcorp – Flagstar Bank. According to the agreement, the transaction includes the purchase of about $38.4 billion in deposits, including $12.9 billion purchased at a discount of $2.7 billion.

Crypto-related deposits of approximately $4 billion aren’t included.

The FDIC will provide these deposits directly to customers whose accounts are associated with the digital banking business.

Signature clients include Paxos, Coinbase and Celsius, which have confirmed their exposure to the bank.

From March 20, all other deposits assumed by Flagstar Bank will continue to be insured by the FDIC, up to the $250,000 insurance limit.

As of December 31, Signature Bank had $88.6 billion in deposits, and the $4 billion represents approximately 4.5% of that total.

The offer, which excluded crypto-related deposits, echoes concerns last week started with the Reuters report dealing with how Signature buyers must give up crypto.

Related: Signature Bank buyers to give up crypto

However, the FDIC denied the report by Reuters, stating that the agency has no right to influence the buyer and that it was solely up to the bidder to decide which assets to take over.

Related: FDIC denies report Signature buyers must give up crypto

As it turned out, Flagstar, Signature buyer, hadn’t included crypto deposits in the offering. Some even accused the FDIC of lying when the agency said the Reuters report contained a false statement:

Whether it was required or not, Flagstar Bank excluded crypto customers.

The majority of Signature’s assets are currently held by the FDIC, which also received stock appreciation rights in the Flagstar parent company under the agreement, valued at approximately $300 million:

Approximately $60 billion in loans will remain in the receivership for later disposition by the FDIC. In addition, the FDIC received equity appreciation rights in New York Community Bancorp, Inc., common stock with a potential value of up to $300 million.