Lori Calvasina, RBC Capital Markets head of US equity strategy, discusses the state of the US economy following the collapse of Silicon Valley Bank and ahead of the Federal Reserve’s March meeting.
The Federal Deposit Insurance Corporation (FDIC) announced late Sunday that New York Community Bank (NYCB) has agreed to buy a significant portion of failed Signature Bank in a $2.7 billion deal.
The FDIC said the deal would include NYCB’s purchase of $38.4 billion in assets of New York-based Signature Bank, about a third of the $110 billion Signature had before the bank failed last week.
The bank will change the name of 40 branches of Signature Bank to Flagstar Bank from Monday. Flagstar is one of the subsidiaries of New York Community Bank.
The FDIC said about $60 billion of Signature Bank’s loans would remain in receivership. These remaining loans are expected to be sold later.
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A woman leaves a Signature Bank branch in New York, Monday, March 13, 2023. (AP Photo/Seth Wenig/AP Newsroom)
Silicon Valley Bank (SVB) collapsed on Friday and about 48 hours later, Signature Bank also failed. The collapse of SVB was the second largest collapse in US history after the collapse of Washington Mutual in 2008.
The collapse of Signature Bank on Sunday was the third largest bank failure in US history.
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FILE – Photo of a branch of Signature Bank is taken Sunday, March 12, 2023, in New York. (AP Photo/Bobby Cana Calvan/AP Newsroom)
Regulators said all depositors and their money at the failed institutions, Silicon Valley Bank and Signature Bank, would be safe even with the figures exceeding $250,000 in federal insurance. He has also taken other steps to try to boost confidence and stop the domino effect in this banking crisis.
Signature Bank, a large commercial lender in the tri-state area, recently expanded its assets to include cryptocurrencies.
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The Federal Deposit Insurance Corporation (FDIC) building is seen on March 17, 2023 in Virginia, United States. (Celal Guns / Anadolu Agency via Getty Images / Getty Images)
This exposure to crypto and tech-focused lending to depositors, along with the prevalence of uninsured deposits, ultimately led to its downfall.
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The FDIC said that taxpayers would not bear the direct cost of Signature Bank’s failure. The estimated cost of the Deposit Insurance Fund is expected to be $2.5 billion, but this figure could change as regulators sell off assets.
The Associated Press contributed to this report.
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