Signature Bank Taken Over By FDIC; Financial Sector Woes Continue
The FDIC has already taken Silicon Valley Bank's US operations into receivership, and the Signature Bank situation adds to a difficult time for the world's banking and tech sector.
Stricken lender Signature Bank was yesterday taken over by federal deposit protection authorities, following in the wake of Silicon Valley Bank which also collapsed in the past few days.
The organization was shut by the New York State Department of Financial Services and the Federal Deposit Insurance Corporation was named as receiver.
The FDIC transferred all the deposits and “substantially” all of the assets of the failed bank to Signature Bridge Bank, NA, a full-service bank that will be operated by the FDIC as it markets the institution to potential bidders, Signature said in a statement on its website.
The failure of Signature and SVB has rattled investors and raised questions about how rising interest rates, after more than a decade of ultra-loose monetary policy, stoked a tech boom that has now hit the buffers.
Signature’s nine national business lines included commercial real estate and digital asset banking. As of September, almost a quarter of its deposits came from the cryptocurrency sector, but the bank announced in December that it would shrink its crypto-related deposits by $8 billion. The cryptocurrency space has been volatile, hit by the bankruptcy late in 2022 of FTX, the cryptocurrency exchange. Signature Bank said in February that its chief executive officer, Joseph DePaolo, would move to a senior advisor role in 2023 and would be succeeded by the bank’s chief operating officer, Eric Howell. DePaolo has served as president and CEO since Signature's inception in 2001.
While not a bulge-bracket bank, Signature is a substantial business. It had 40 branches across the country in New York, California, Connecticut, North Carolina, and Nevada.
“Banking activities will resume Monday, March 13, 2023, including online banking. Depositors and borrowers will automatically become customers of Signature Bridge Bank, NA and will continue to have uninterrupted customer service and access to their funds by ATM, debit cards, and writing checks in the same manner as before,” it said. “Signature Bank’s official checks will continue to clear. Loan customers should continue making loan payments as usual,” it continued.
“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,” the statement said.
Senior managers have been “removed,” the statement continued.
“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,” it said.
Signature Bank had total assets of $110.4 billion and total deposits of $88.6 billion as of December 31, 2022.
The FDIC named Greg D Carmichael as CEO of Signature Bridge Bank, NA. Carmichael recently served as president and CEO of Fifth Third Bancorp.