Signature Bank was shut down by New York state financial regulators on Sunday, the US Treasury Department said in a statement..
All depositors will have access to their money on Monday, according to the official report. The Federal Reserve and the Federal Deposit Insurance Corporation also signed the statement..
Officials took the extraordinary step of designating SVB and Signature Bank as a systemic risk to the financial system, giving regulators flexibility to support uninsured deposits. The Federal Reserve and Treasury Department also used emergency lending authorities to set up a new facility to support bank deposits.
Regulators announced the measures in a joint statement by Treasury Secretary Janet Yellen, Fed Chairman Jerome Powell, and Federal Deposit Insurance Corporation President Martin Gruenberg. The group said SVB and Signature depositors would have access to all their money on Monday.
Although depositors will be compensated, shareholders and some holders of unsecured debt will not be protected.
Signature shares closed Friday at $70 after a sharp drop in recent months. The bank had banked crypto clients and recently signaled a withdrawal from that business, but Wall Street has been concerned in recent days about its high proportion of uninsured deposits, which were seen as likely to flee following the collapse of Silicon Valley Bank.
Signature Bank, a New York State chartered commercial bank that is Fdic insured, had total assets of about $110.36 billion and total deposits of about $88.59 billion as of December 31the New York Department of Financial Services said in a separate statement.
Signature Bank representatives did not immediately respond to a request for comment.
Silicon Valley Bank abruptly became the biggest failed US lender in more than a decade on Friday, collapsing in less than 48 hours after outlining a plan to shore up capital. The bank took a big loss on sales of its securities amid rising interest rates, scaring investors and depositors who quickly began withdrawing their money.. Investors and depositors tried to withdraw about $42 billion on Thursday alone.
US regulators are racing against time to find solutions for failed Silicon Valley Bank and prevent potential contagion from spreading to other lenders. Treasury Secretary Janet Yellen said Sunday that she passed a resolution for Silicon Valley Bank “that fully protects all depositors”. Concerns for the health of other smaller, venture capital-focused banks and start-up communities are prompting regulators to consider extraordinary measures to protect financial institutions and their depositors.
The New York Department of Financial Services is at “close contact 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 world financial systeml,” Superintendent Adrienne A. Harris said in her agency’s statement.
