Signature Bank Shut Down and Placed Under FDIC Control

Regulators have closed down crypto-friendly lender Signature Bank in an attempt to stave off a banking crisis.

The Federal Reserve, Federal Deposit Insurance Corporation (FDIC) and U.S. Treasury announced the New York-based bank’s closure under a “systemic risk exception” Sunday (March 12) evening, two days after the collapse of Silicon Valley Bank.

According to the statement, Signature Bank was closed Sunday by the New York Department of Financial Services (NYDFS), which turned over control to the FDIC.

“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 statement said.

“Shareholders and certain unsecured debtholders will not be protected. Senior management has also been removed. Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law.”

Signature Bank had about $110.36 billion in assets and total deposits of about $88.59 billion as of the end of 2022, NYDFS said Sunday.

“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,” the agency said.

The news comes days after Silvergate Bank — another bank that, like Signature, had once courted the cryptocurrency industry — was placed under FDIC receivership after saying it could no longer continue as a going concern.

As PYMNT has written, Signature Bank had sought to distance itself from the digital asset sector after the downfall of crypto platform FTX, which was one of the bank’s clients.

“We’re not just a crypto bank and we want that to come across loud and clear,” Chief Operating Officer Eric Howell told an industry conference last December.

He added that Signature was “going to exit about $8 billion to $10 billion worth of deposits in that space, which we can easily cover through cash and borrowings.” In January, Signature reportedly placed a $100,000 minimum on crypto transactions.

The bank was sued last month by trading firm Statistica Capital, which claims the bank allegedly “had actual knowledge of and substantially facilitated the now-infamous FTX fraud.” The suit also accuses Signature of permitting the commingling of FTX customer funds within Signet, the bank’s blockchain-based payments network.

Regulators closed Silicon Valley Bank (SVB) on Friday and seized its deposits in the second largest bank failure in American history, and the largest since the financial crisis of 2008. SVB, a relatively unknown bank that was nonetheless the 20th largest in the country, suffered a run on deposits after reports that it was struggling.