A man entering Signature Bank in New York City on March 12, 2023.
U.S. regulators on Sunday shut down New York-based Signature Bank in a bid to prevent the spreading banking crisis.
“We are also announcing a similar systemic risk exception for Signature Bank, New York, New York, which was closed today by its state chartering authority,” Treasury, Federal Reserve, and FDIC said in a joint statement Sunday evening.
The banking regulators said depositors at Signature Bank will have full access to their deposits, a similar move to ensure depositors at the failed Silicon Valley Bank will get their money back.
“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,” the regulators said.
The regulators shuttered Silicon Valley Bank on Friday and seized its deposits in the largest U.S. banking failure since the 2008 financial crisis — and the second-largest ever. The dramatic moves come just days after the tech-focused institution reported that it was struggling, triggering a run on the bank’s deposits.
Signature is one of the main banks to the cryptocurrency industry. It had a market value of $4.4 billion as of Friday, according to FactSet. The stock had fallen nearly 40% this year after its crypto banking peer Silvergate Capital liquidated its bank.
As of Dec. 31, Signature had $110.4 billion in total assets and $88.6 billion in total deposits, according to a securities filing.
To stem the damage and stave off a bigger crisis, the Fed and Treasury created an emergency program to backstop deposits at both Signature Bank and Silicon Valley Bank using the Fed’s emergency lending authority.
While depositors will have access to their money, equity and bondholders at both banks are being wiped out, a senior Treasury official said.