NEW York Community Bancorp (NYCB) is pursuing a deal to acquire failed Signature Bank, according to people familiar with the matter.

The Federal Deposit Insurance Corporation (FDIC) could announce a deal for Signature as soon as this week, said the people, who asked to not be identified because the matter isn’t public. No final decision has been made and talks could collapse. Representatives for NYCB and the FDIC didn’t immediately reply to messages seeking comment.

US prosecutors were investigating New York-based Signature Bank’s work with crypto clients before regulators lost faith in management and swooped in this month to seize the lender, along with larger Silicon Valley Bank. The failures of those two firms as well as the collapse days earlier of Silvergate Capital, another crypto-friendly lender, stoked concerns about spillover effects to other regional lenders and the wider economy.

Much like Silicon Valley Bank, with clients made up almost entirely of businesses, Signature had a deposit base that was mostly uninsured. That may have attracted the attention of regulators looking into the stability of banks with large uninsured deposit bases.

The FDIC said it transferred all Signature Bank deposits and substantially all of the firm’s assets to Signature Bridge Bank, a full-service bank that will be operated by the FDIC as it markets the company to potential bidders.

‘Sizable undertaking’

An acquisition by New York Community Bancorp “could be a sizable undertaking”, following NYCB’s recent acquisition of Flagstar Bancorp for about US$2.6 billion, Bloomberg Intelligence analysts Herman Chan and Sergio Ferreira said in a research note on Sunday (Mar 19).

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“NYCB and Signature have similar strategies and culture as well as overlap in commercial real estate,” they wrote. “Yet buying Signature would seemingly bump the combined bank above US$100 billion in assets and usher in tougher regulatory requirements.”

Financial watchdogs and Justice Department officials have repeatedly warned that companies handling crypto or related cash must be vigilant in identifying customers and ensuring money flows are for legitimate purposes. Banks in particular are obligated to flag suspicious transactions to federal authorities.

Silvergate is being investigated by the Justice Department over dealings with Sam Bankman-Fried’s defunct FTX exchange and Alameda Research, Bloomberg has reported. Federal prosecutors and the US Securities and Exchange Commission also are examining the collapse of Silicon Valley Bank, including whether stock sales by executives violated trading rules.

Signature didn’t disclose the inquiries in its most recent regulatory filings.

After FTX’s November implosion, Signature executives said they intended to shed as much as US$10 billion of deposits from digital-asset clients, which at the time represented more than a fifth of its deposit base. But they still planned to keep some. BLOOMBERG