US regulators shut down New York-based Signature Bank on Sunday in an effort to prevent a banking crisis from spreading in the wake of last week’s failure of Silicon Valley Bank (SVB).
In a statement, New York State Department of Financial Services (DFS) Superintendent Adrienne A. Harris said the department has taken possession of Signature Bank, adding this was done “in order to protect depositors.”
“DFS appointed the Federal Deposit Insurance Corporation (FDIC) as receiver of the bank,” Harris said.
She said the bank is FDIC-insured, with total assets of nearly $110.36 billion and total deposits of about $88.59 billion as of the end of 2022.
“DFS is in 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 global financial system,” she said.
Signature Bank has been a big lender to the crypto industry, being second only to Silvergate Capital, which announced last Wednesday that it will close operations and liquidate its bank
SVB was first FDIC-insured institution to fail in 2023
Shares of California-based SVB dropped more than 60% on Thursday after it sold a $21 billion bond portfolio at a nearly $1.8 billion loss and announced that it planned to raise more than $2 billion in capital.
Its operations were suspended as the bank continued to lose in the futures market after some venture capital investors advised startups to pull their money from the bank to avoid losses on deposits in excess of the FDIC’s $250,000 coverage limit.
The California Department of Financial Protection and Innovation (DFPI) took possession of the bank and appointed the FDIC as the receiver of SVB, which caused a decline in the markets. The SVB was the first FDIC-insured institution to fail 2023.
SVB became the largest bank failure since the 2008 financial crisis.
Source: Anadolu Agency