Signature Bank Noncrypto-Related Deposits to Be Assumed by New York
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Signature Bank Noncrypto-Related Deposits to Be Assumed by New York

written by John Murphy | March 20, 2023

Signature Bank’s 40 former branches will operate under Flagstar Bank, N.A. from Monday. Operated by New York Community Bancorp. The FDIC will make business deposits directly available for these customers in digital banking. 

Noncrypto-related deposits from the former signing bank (now signing bridge bank) will be processed by Flagster Bank, a subsidiary of New York Community Bancorp, Sunday time.  

Signature Bridge Bank depositors (other than digital banking-related depositors) automatically become Flagstar depositors and continue to be insured by the FDIC up to their insurance limit.  

Flagstar Bank’s proposal did not include $4 billion in deposits related to the former Signature Bank’s digital banking business. According to a press release, the FDIC will make these deposits directly available to customers with accounts connected to digital banking. 

New York Community Bancorp, a regional bank based in New York City, has assumed the non-crypto-related deposits of Signature Bank, according to the Federal Deposit Insurance Corporation (FDIC).

The move follows the announcement last month that Signature Bank is discontinuing its deposit-taking services for crypto companies due to increased regulatory scrutiny and compliance costs.

Under the deal, New York Community Bank has acquired approximately $2.6 billion in deposits, comprising about 16,000 accounts. The New York-based bank said it plans to serve these customers seamlessly and without disruption. The transaction marks the largest deposit acquisition ever in New York Community Bank’s history.

Customers whose accounts were transferred to New York Community Bank would be able to continue using their debit cards and checks, and customer service would remain the same, according to the FDIC.

In a statement, New York Community Bank CEO Joseph Ficalora said;

the transaction would expand the bank’s customer base and strengthen its deposit franchise. He said the bank is committed to serving the banking needs of the local community, and that the transaction aligns with its strategy of organic and inorganic growth.

The move comes as Signature Bank grapples with the fallout from its decision to stop providing banking services to crypto-related companies. The bank had been a major player in the crypto space, providing banking services to some of the industry’s most high-profile companies, including Coinbase and Bitfinex.

However, the bank announced last month that it was discontinuing these services due to “increased regulatory scrutiny” and the “evolving regulatory landscape.” The decision was seen as a setback for the crypto industry, as it highlighted the difficulty of obtaining banking services for crypto companies.

Signature Bank’s decision came after the New York State Department of Financial Services issued new guidance requiring crypto companies to maintain reserves equivalent to the value of their outstanding crypto assets.

The guidance was seen as an attempt to bring the industry into the mainstream financial system and increase consumer protection.

The move has been criticized by some in the crypto industry, who say it places an undue burden on crypto companies and could stifle innovation.

Some have called for more clarity and guidance from regulators to enable the industry to thrive.