Regulators close New York’s Signature bank, say depositors will be made whole
A worker arrives to the Signature Bank headquarters in New York City, U.S., March 12, 2023. REUTERS/Eduardo Munoz
State regulators closed New York-based Signature Bank on Sunday, just two days after California authorities shuttered Silicon Valley Bank, in a collapse that roiled global markets and left billions of dollars of deposits belonging to companies and investors stranded.
The U.S. Treasury Department and other bank regulators said in a joint statement on Sunday that all depositors of Signature Bank will be made whole, and “no losses will be borne by the taxpayer.” The Signature failure is the third-largest in U.S. history.
New York banking regulators appointed Federal Deposit Insurance Corp (FDIC) as receiver for later disposition of the bank’s assets. Signature Bank reported deposit balances totaling $89.17 billion as of March 8. As of Dec. 31, it had about $110.36 billion in assets, according to New York state’s Department of Financial Services.
Representatives for Signature Bank did not immediately respond to a request for comment.
A locked door to a Silicon Valley Bank (SVB) location on Sand Hill Road is seen in Menlo Park, California, U.S. March 10, 2023. REUTERS/Jeffrey Dastin/File photo
The bank’s failure followed Silicon Valley Bank’s Friday shutdown, the largest failure since Washington Mutual went bust in 2008 during the financial crisis. Washington Mutual still ranks as the largest bank failure in U.S. history.
U.S. officials on Sunday said Silicon Valley Bank customers will have access to their deposits starting on Monday. The federal government also announced actions to shore up deposits and stem any broader financial fallout from the collapse of the tech startup-focused lender.
Signature Bank, a commercial bank with private client offices in New York, Connecticut, California, Nevada and North Carolina, had nine national business lines including commercial real estate and digital asset banking.
As of September, almost a quarter of Signature’s deposits came from the cryptocurrency sector, but the bank announced in December that it would shrink its crypto-related deposits by $8 billion.
Signature Bank announced in February that its chief executive officer, Joseph DePaolo, would transition into a senior adviser role in 2023 and would be succeeded by the bank’s chief operating officer, Eric Howell. DePaolo has served as president and CEO since Signature’s inception in 2001.
The bank had had a long-standing relationship with former President Donald Trump and his family, providing Trump and his business with checking accounts and financing several of the family’s ventures. Signature Bank cut off ties with Trump in 2021 following the deadly Jan. 6 riots on Capitol Hill and urged Trump to resign.
Officials on Sunday said shareholders and certain unsecured debtholders of Signature Bank, as well of Silicon Valley Bank, would not be protected, and that senior management of both banks has been removed.
Any losses to the FDIC’s Deposit Insurance Fund used to support uninsured depositors will be recovered by a special assessment on banks, as required by law, officials said.
READ:
Worry for tech startups after Silicon Valley Bank failure
