Signature Bank — a New York-based lender focused on servicing companies in the crypto industry — has shut down. The New York State Department of Financial Services closed the bank on Sunday, appointing the FDIC as a receiver.
U.S. President Joe Biden said that Treasury Secretary Janet Yellen and Economic Council Director Brian Deese worked with regulators to address problems both at SVB and Signature Bank “at his direction.”
“I’m pleased they reached a solution that protects workers, small businesses, taxpayers, and our financial system,” Biden tweeted on Sunday. “I’m firmly committed to holding those responsible for this mess fully accountable and to continuing our efforts to strengthen oversight and regulation of larger banks so that we are not in this position again.”
Signature is the second major bank to fail in two days, following the closing of Silicon Valley Bank on March 10.
Just like with Silicon Valley Bank, FDIC transferred all of Signature’s deposits and assets to the new full-service bank it created, Signature Bridge Bank. Activities in the bank’s 40 branches across the U.S. will resume on March 13 — including online banking.
The FDIC noted that all customers will continue to have uninterrupted access to their funds.
“The transfer of all the deposits was completed under the systemic risk exception approved earlier today. All depositors of the institution will be made whole. No losses will be borne by the taxpayers. Shareholders and certain unsecured debt holders will not be protected. Senior management has also been removed. Any losses to the Deposit Insurance Fund (DIF) to support uninsured depositors will be recovered by a special assessment on banks, as required by law,” the FDIC said in the announcement.
The actions are set to protect depositors and preserve the value of the bank’s assets while the FDIC looks for potential bidders.
Signature’s stock price shed almost 40% of its value since the beginning of the year after peaking in early 2022. In the past several months, the bank signed on several large clients that left Silvergate — including LedgerX and Coinbase.
Coinbase said it had around $240 million in corporate cash balance at Signature, which it expects to recover fully.
