FDIC hires Newmark Group to sell billions of Signature Bank debt

By Manya Saini

(Reuters) -The Federal Deposit Insurance Corp (FDIC) has hired Newmark Group (NASDAQ:) Inc to sell about $60 billion of failed lender Signature Bank (OTC:)’s loans, a person familiar with the matter told Reuters on Wednesday.

The U.S. banking industry has been reeling from the fallout of recent failures, with regulators seeking to reassure customers their deposits were safe and that the American banking system remained healthy.

Regional bank stocks have been battered as investors stayed away from the sector amid doubts over whether the U.S. Federal Reserve would hold off on its plans to aggressively hike interest rates, which have been blamed for eroding book value of securities and sparking the biggest banking crisis since 2008. 

The commercial property market is likely to see a ripple effect from the sale of a loan book this large, at a time when property values are already being squeezed, according to a report in the Wall Street Journal, which first reported the news.

FDIC declined to comment while Newmark Group did not immediately respond to a Reuters request for comment on the matter.

Earlier this month, state regulators closed New York-based Signature Bank, making it the third largest failure in U.S. banking history.

On March 19, a subsidiary of New York Community Bancorp (NYSE:) entered into an agreement with U.S. regulators to buy deposits and loans from Signature Bank.

The subsidiary, Flagstar Bank, assumed substantially all of Signature Bank’s deposits, some of its loan portfolios and all 40 of its branches.

On Tuesday, FDIC told Signature Bank’s crypto clients they have until April 5 to close their accounts and move their money. The deposits in question were not part of a rescue deal arranged with Flagstar Bank. New York’s financial regulator had said earlier in March its decision to close Signature Bank had “nothing to do with crypto.”