Regulators shut down Signature Bank, say depositors will be protected
Signature Bank was seized by regulators Sunday evening, the second failure of a regional bank in about 48 hours.
New York-based Signature, with $110 billion in assets and $89 billion in deposits, was a smaller institution than Silicon Valley Bank, which was taken over by the government Friday afternoon in the second-biggest bank failure ever. At Signature, the third-biggest bank failure, most clients were businesses, like at Silicon Valley, and many of them held deposits that exceeded the FDIC’s insurance cap of $250,000.
In a statement, federal authorities said all depositors at Signature would be made whole. Shareholders will be wiped out, and senior management has been removed. Funds to support uninsured depositors at both failed institutions will be recovered by a special assessment on other banks, the government said, as required by law. Regulators acted because they determined that Signature and Silicon Valley posed “systemic risk” to the financial system.
After Silicon Valley was seized Friday, the government said depositors whose accounts exceeded $250,000 would be given an I.O.U. On Sunday the government said all depositors will have access to all their money on Monday.
Signature’s stock price fell by 23%, to $70 a share, on Friday after Silicon Valley was seized, a sign that investors were worried about its viability. Signature had held deposits for cryptocurrency clients including Binance and FTX, but in the aftermath of the collapse of FTX, billions in deposits went out the door. Last Thursday the bank said it held $89 billion in deposits, and that figure had increased in recent weeks and days.
In a joint statement Sunday, U.S. Treasury Secretary Janet Yellen, Federal Reserve Chairman Jerome Powell and FDIC Chairman Martin Gruenberg said they took “decisive actions to protect the U.S. economy by strengthening public confidence in our banking system.” They also said no losses associated with the resolution of Signature or Silicon Valley Bank would be borne by taxpayers.
The New York Department of Financial Services said it is working with “all regulated entities in light of market events, monitoring market trends and collaborating closely with other state and federal regulators to protect consumers, ensure the health of the entities we regulate and preserve the stability of the global financial system.”
When asked for additional information, a spokeswoman referred to the agency’s statement.