Washington: State regulators shut down New York-based Signature Bank on Sunday, two days after authorities called it the third biggest failure in US banking history. Silicon Valley Bank In a collapse that trapped billions of deposits.
The Federal Deposit Insurance Corporation (FDIC) took over Signature, which held $110.36 billion in assets and $88.59 in deposits at the end of last year, according to the New York State Department of Financial Services.
In a joint statement, the US Treasury Department and other bank regulators said all depositors of Signature Bank and Silicon Valley Bank would be made whole, and “no loss will be borne by the taxpayer”.
Employees appeared to gather at the company’s Manhattan headquarters for meetings on Sunday, ordering catering from Carmine, an Italian restaurant, and Starbucks coffee, according to a Reuters reporter at the scene. People came out as soon as they got the news of the closure of the building.
Representatives for the lender did not immediately respond to a request for comment.
Signature’s failure followed Friday’s shutdown of Silicon Valley Bank, the second largest shutdown in US history after Washington Mutual, which collapsed during the 2008 financial crisis.
Investors were jittery over the speed at which startup-focused SVB, the 16th largest lender in the US, dropped customer withdrawals. Last week’s event wiped out more than $100 billion in market value from US banks, prompting swift action over the weekend from government officials trying to restore confidence in the financial system.
The FDIC established a “bridge” successor bank on Sunday that would enable customers to access their funds on Monday. The FDIC said that Signature Bank depositors and borrowers would automatically become Bridge Bank customers.
The regulator named former Fifth Third Bancorp chief executive officer Greg Carmichael as CEO of Bridge Bank.
US officials said on Sunday that customers of the Silicon Valley bank would have access to deposits from Monday. The federal government also announced action to shore up deposits and prevent any wider decline.
Signature was a commercial bank with private client offices in New York, Connecticut, California, Nevada and North Carolina, and nine national business lines including commercial real estate and digital asset banking.
As of September, nearly a quarter of its deposits came from the cryptocurrency sector, but the bank announced in December that it would reduce its crypto-related deposits to $8 billion.
Signature Bank announced in February that its chief executive officer, Joseph DePaolo, would transition to a senior advisory role in 2023 and would be replaced by the bank’s chief operating officer, Eric Howell. DePaolo has served as President and CEO of Signature since its founding in 2001.
The bank had a long-standing relationship with former President Donald Trump and his family, providing Trump and his business with checking accounts and funding many of the family’s ventures. Signature Bank severed ties with Trump in 2021 after the deadly January 6 riots on Capitol Hill and urged Trump to resign.
In a statement, New York Governor Cathy Hochul said she hoped the US government’s action on Sunday “increases confidence in the stability of our banking system.”
“Many depositors at these banks are small businesses, including those driving the innovation economy, and their success is critical to New York’s strong economy,” she said.
Signature Bank shareholders and some unsecured borrowers, as well as those at Silicon Valley Bank, will not be protected and senior management at both banks have been removed, officials said on Sunday.
Officials said any losses in the FDIC’s Deposit Insurance Fund would be offset by a special assessment of the banks, as required by law.
The Federal Deposit Insurance Corporation (FDIC) took over Signature, which held $110.36 billion in assets and $88.59 in deposits at the end of last year, according to the New York State Department of Financial Services.
In a joint statement, the US Treasury Department and other bank regulators said all depositors of Signature Bank and Silicon Valley Bank would be made whole, and “no loss will be borne by the taxpayer”.
Employees appeared to gather at the company’s Manhattan headquarters for meetings on Sunday, ordering catering from Carmine, an Italian restaurant, and Starbucks coffee, according to a Reuters reporter at the scene. People came out as soon as they got the news of the closure of the building.
Representatives for the lender did not immediately respond to a request for comment.
Signature’s failure followed Friday’s shutdown of Silicon Valley Bank, the second largest shutdown in US history after Washington Mutual, which collapsed during the 2008 financial crisis.
Investors were jittery over the speed at which startup-focused SVB, the 16th largest lender in the US, dropped customer withdrawals. Last week’s event wiped out more than $100 billion in market value from US banks, prompting swift action over the weekend from government officials trying to restore confidence in the financial system.
The FDIC established a “bridge” successor bank on Sunday that would enable customers to access their funds on Monday. The FDIC said that Signature Bank depositors and borrowers would automatically become Bridge Bank customers.
The regulator named former Fifth Third Bancorp chief executive officer Greg Carmichael as CEO of Bridge Bank.
US officials said on Sunday that customers of the Silicon Valley bank would have access to deposits from Monday. The federal government also announced action to shore up deposits and prevent any wider decline.
Signature was a commercial bank with private client offices in New York, Connecticut, California, Nevada and North Carolina, and nine national business lines including commercial real estate and digital asset banking.
As of September, nearly a quarter of its deposits came from the cryptocurrency sector, but the bank announced in December that it would reduce its crypto-related deposits to $8 billion.
Signature Bank announced in February that its chief executive officer, Joseph DePaolo, would transition to a senior advisory role in 2023 and would be replaced by the bank’s chief operating officer, Eric Howell. DePaolo has served as President and CEO of Signature since its founding in 2001.
The bank had a long-standing relationship with former President Donald Trump and his family, providing Trump and his business with checking accounts and funding many of the family’s ventures. Signature Bank severed ties with Trump in 2021 after the deadly January 6 riots on Capitol Hill and urged Trump to resign.
In a statement, New York Governor Cathy Hochul said she hoped the US government’s action on Sunday “increases confidence in the stability of our banking system.”
“Many depositors at these banks are small businesses, including those driving the innovation economy, and their success is critical to New York’s strong economy,” she said.
Signature Bank shareholders and some unsecured borrowers, as well as those at Silicon Valley Bank, will not be protected and senior management at both banks have been removed, officials said on Sunday.
Officials said any losses in the FDIC’s Deposit Insurance Fund would be offset by a special assessment of the banks, as required by law.
,
- Advertisement -
