Signature Bank, one of the largest lenders in the crypto industry, was shut down by New York regulators on Sunday in the third largest bank failure in US history, only for Silicon Valley Bank shutdown on Friday and the collapse of Washington Mutual during 2008 financial crisis.
Citing “systemic risks” that led to the closure, New York regulators said yes FDIC was appointed as the bankruptcy administrator of the bank. It is the third bank collapse in less than a week, following Wednesday’s Silvergate liquidation and Friday’s closing of Silicon Valley Bank. Signature had $110 billion in assets and about $88.6 billion in total deposits at the end of last year, ranking it 29th among U.S. banks by assets. His Market value on Friday it was $4.4 billion.
In a joint statement FDIC, Federal Reserve Systemand Ministry of Finance, regulators insured “All institution depositors will be whole. As with the Silicon Valley Bank decision, there will be no loss to taxpayers. Depositors in the bank will also have full access to their deposits. Owners of shares and bonds – as with SVB – will be wiped out. Signature Bank has offices in New York, Connecticut, California, Nevada and North Carolina.
Like Silvergate, Signature Bank has been a major lender to the cryptocurrency industry, with nearly a quarter of the bank’s deposits coming from the crypto sector. As a result, the bank experienced a large outflow of deposits FTX collapse and other high-profile crypto exchanges, with deposits down 17% in the fourth quarter of 2022 compared to the previous year. The bank’s woes were further compounded by rising interest rates as a result of the Fed’s rate hikes.
In the weeks leading up to its closure, Signature Bank attempted to reassure investors of its financial health, declaring a “strong, well-diversified financial position” and seeking to reduce its exposure to cryptocurrencies. That didn’t stop investors from liquidating their positions, as shares of Signature Bank (SBNY) sold off 20% on Friday and were 76% lower than a year earlier before the bank closed on Sunday.
U.S. bank stocks fell in early trading on Monday, led by a 70% plunge in shares of First Republic Bank (FRC). The broader financial sector fell by more than 3%.