New York – US authorities closed the New York bank Signature Bank. The decision follows Friday's closure of Sillicon Valley Bank (SVB), which became the biggest bank failure in the US since the collapse of Washington Mutual in 2008. Regulators said keeping the bank in operation could threaten the stability of the entire financial system. Signature Bank had deposits of USD 88.59 billion (two trillion CZK) and assets of USD 110.36 billion at the end of last year, the New York State Department of Finance announced.
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The Federal Deposit Insurance Corporation (FDIC) took control of Signature Bank. All savers will be compensated and there will be no loss to taxpayers, the US Treasury and banking regulators added in a joint statement.
Signature was a commercial bank with private client offices in New York, Connecticut, California, Nevada and North Carolina. It had eight national business areas, including commercial real estate and digital banking. Almost a quarter of its deposits were from the cryptocurrency sector, but in December the bank announced it would reduce its crypto-related deposits by $8 billion.
Signature's collapse is bad news for many of the professional services firms that relied on it . For a long time, the bank specialized in providing banking services to law firms and provided safekeeping of clients' money and other services. It also had a large volume of real estate loans.
The end of the bank is also likely to be a big blow to the crypto industry, and together with the recent shutdown of crypto bank Silvergate Capital and the bankruptcy of SVB, this could spell serious trouble for the industry. Signature was one of the few banks that accepted cryptocurrency deposits. It also operates a real-time cryptocurrency payment platform: 24 hours a day, seven days a week. Together with Silvergate, it was the main bank for cryptocurrency companies.
According to analysts, Signature has fallen somewhat victim to the panic surrounding SVB. Its closure also highlights the challenges facing small and medium-sized banks, which often focus on niche industries and have a narrower customer base than giants like JPMorgan Chase or Bank of America. This then makes them extremely vulnerable to classic “bank runs”, i.e. situations where clients start withdrawing deposits en masse because they lose confidence in the bank.
Similar to SVB, most deposits at Signature are uninsured. Around 90 percent of deposits at Signature and at SVB are not insured. According to US law, only deposits up to USD 250,000 are insured with the FDIC. Treasury Secretary Janet Yellen, US Federal Reserve Chairman Jerome Powell and FDIC Chairman Martin Gruenberg said in a joint statement Sunday night that all depositors, including those whose funds exceed the maximum state-insured level, will be compensated.
Signature The bank had a long-standing relationship with former President Donald Trump and his family. She provided checking accounts for Trump and his businesses and financed several family businesses. However, it cut ties with Trump in 2021 after the January riots at the Capitol and called for Trump to resign.
The FDIC has set up a bridging successor bank that will allow clients to access their funds starting today. Depositors and borrowers of Signature Bank will automatically become clients of the bridging bank. Former Fifth Third Bancorp CEO Greg Carmichael was appointed director of the bridging bank, Reuters reported.
