Signature Bank New York, which worked with cryptocurrency companies, was closed by the state chartering authority, New York Department of Financial Services (DFS), U.S. regulators announced on Sunday March 12.
All depositors will be able to receive 100% of their money, federal regulators said.
“All depositors of this institution will be made whole. As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer,” according to a joint statement from Secretary of the Treasury Janet Yellen, Federal Reserve Board Chair Jerome Powell, and the Federal Deposit Insurance Corporation (FDIC) Chairman Martin Gruenberg.
“Shareholders and certain unsecured debt holders will not be protected,” the agencies said. “Senior management has also been removed. Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law.”
The deposits and assets of Signature Bank were transferred immediately to Signature Bridge Bank, N.A., a full-service bank that will be operated by the FDIC as “it markets the institution to potential bidders,” a separate statement said.
The FDIC named Greg D. Carmichael as CEO of Signature Bridge Bank, N.A. He recently served as president and CEO of Fifth Third Bancorp.
Signature Bank had 40 branches in the U.S, including New York, California, Connecticut, North Carolina, and Nevada.
Customers will be able to resume their banking activities on March 13, including online banking while payments for loans should be made.
All depositors and customers with loans will “automatically become customers of Signature Bridge Bank, N.A. and will continue to have uninterrupted customer service and access to their funds by ATM, debit cards, and writing checks in the same manner as before. Signature Bank’s official checks will continue to clear.”
The regulators said shareholders and certain unsecured debt holders will not be protected.
Signature Bank had total assets of $110.4 billion and total deposits of $82.6 billion as of December 31, 2022.
The new bank, Signature Bridge Bank, N.A., will be operated by the FDIC, who will “maximize the value of the institution for a future sale and to maintain banking services in the communities formerly served by Signature Bank.”
Signature Bridge Bank is a bridge bank and is a chartered national bank that operates under a board appointed by the FDIC.
“It assumes the deposits and certain other liabilities and purchases certain assets of a failed bank,” the FDIC said. “The bridge bank structure is designed to ‘bridge’ the gap between the failure of a bank and the time when the FDIC can stabilize the institution and implement an orderly resolution.”
The Federal Reserve Board on Sunday also said it would make “available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors.”
The agencies said the “U.S. banking system remains resilient and on a solid foundation, in large part due to reforms that were made after the financial crisis that ensured better safeguards for the banking industry. Those reforms combined with today’s actions demonstrate our commitment to take the necessary steps to ensure that depositors’ savings remain safe.”
This is the second bank closure in three days.
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