New York regulators close Signature Bank, say depositors will be made whole

State regulators closed New York-based Signature Bank on Sunday (Mar 12), days after California authorities shuttered Silicon Valley Bank, in a collapse that roiled global markets and left billions of dollars of uninsured deposits belonging to companies and investors stranded.

The US 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”.

New York banking regulators appointed the Federal Deposit Insurance Corporation (FDIC) as receiver for later disposition of the bank’s assets. Signature Bank reported deposit balances totalling US$89.17 billion as of Mar 8.

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

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.

US 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 US$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 as 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.

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