Signature Bank Seized By US Regulators

New York-based Signature Bank has failed, marking the third-largest bank failure in US history with assets valued at over $110 billion.

Similar to the case with Silicon Valley Bank clients, depositors at Signature Bank will also have access to their funds through a “systemic risk exception.” The failures of these banks have raised concerns about the stability of smaller banks that serve the venture capital and startup sectors, leading regulators to explore unconventional methods to safeguard these institutions and their depositors.

As of March 8, Signature Bank had deposited over $89.17 billion and is a significant lender to crypto businesses. Its involvement in the FTX crypto exchange collapse late last year, where it held accounts representing less than 0.1% of its total deposits, brought the bank to the forefront of attention.

Following the FTX crypto exchange collapse in December, Signature Bank announced its intention to reduce its digital-asset client deposits by up to $10 billion.

According to an individual familiar with the company’s operations, the decision to put Signature Bank into receivership came as a shock to its management, who learned of it just before the public announcement. Although the bank experienced a significant outflow of deposits on Friday, the situation had stabilized by Sunday.

US regulators are working urgently to find solutions for the failed Silicon Valley Bank and prevent a possible spread of contagion to other financial institutions.

Janet Yellen, the Treasury Secretary, earlier on Sunday stated that she authorized a resolution for Silicon Valley Bank that ensures complete protection for all depositors.

The New York Department of Financial Services said that it was closely monitoring market events and collaborating with other state and federal regulators to safeguard consumers, maintain the health of regulated entities, and preserve global financial system stability.

As per the US authorities, taxpayers are likely to not incur any losses as a result of the failures of Silicon Valley Bank and Signature Bank. However, these failures have raised concerns about the well-being of smaller banks and the potential for contagion to spread to other lenders. As a result, regulators are contemplating extraordinary measures to safeguard financial institutions and their depositors.

Read Also: Silicon Valley Bank Collapse Sends Shockwaves Through Cryptocurrency Markets, USDC Value Drops Due To Revelations That $3.3B Held At SVB

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