Regulators shut down signature bank, say depositors will be made whole by Reuters

© Reuters. A worker arrives at the Signature Bank headquarters in New York City, U.S., March 12, 2023. REUTERS/Eduardo Munoz

By Hannah Lang

(Reuters) – State regulators shut down New York-based Signature Bank (NASDAQ: ) on Sunday, days after California authorities shut down Silicon Valley Bank, in a collapse that rocked global markets and left billions of dollars of uninsured deposits belonging to companies and investors stranded.

The U.S. Treasury Department and other banking regulators said in a joint statement Sunday that all depositors of Signature Bank will be made whole and “no loss will be borne by taxpayers.”

New York banking regulators appointed the Federal Deposit Insurance Corporation (FDIC) as receiver for the subsequent disposal of the bank’s assets. Signature Bank reported deposit balances totaling $89.17 billion as of 8. March.

Representatives for Signature Bank did not immediately respond to a request for comment.

The bank’s failure followed Silicon Valley Bank’s shutdown on Friday, the biggest failure since Washington Mutual went bankrupt in 2008 during the financial crisis.

US officials said Sunday that Silicon Valley Bank customers will have access to their deposits starting Monday. The federal government also announced actions to support deposits and stem wider economic 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 areas, including commercial real estate and digital asset banking.

As of September, nearly 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 CEO, Joseph DePaolo, would transition to a senior advisor role in 2023 and would be succeeded by the bank’s CEO, Eric Howell. DePaolo has served as President and CEO since Signature’s inception in 2001.

The bank had a long-standing relationship with former President Donald Trump and his family, providing Trump and his company with checking accounts and financing for several of the family’s ventures. Signature Bank cut ties with Trump in 2021 after the deadly Jan. 6 riots on Capitol Hill and called on Trump to resign.

Officials said Sunday that shareholders and certain unsecured debt holders of Signature Bank, as well as Silicon Valley Bank, would not be protected and that senior management at both banks has been removed.

Any loss to the FDIC’s Deposit Insurance Fund, which is used to support uninsured depositors, would be recovered by a special assessment of banks, as required by law, officials said.

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