US regulators close Signature Bank

US regulators close Signature Bank

Signature Bank, which has been a supporter of the crypto industry, has been closed by US regulators in the aftermath of the Silicon Valley Bank collapse.

The FDIC and the Federal Reserve said this move was made under a “systemic risk exception.” Control of the bank has been turned over to the FDIC.

Commenting on the closure, the FDIC said, “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.”

It added, “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.”

Finally, the Federal Reserve Board stated it will make additional funding available to eligible depository institutions to help assure banks have the ability to meet the needs of their depositors.

According to a report from PYMNTS, Signature Bank had around $110.36bn in assets and total deposits of around $88.59bn as of the end of 2022.

Following the collapse of the cryptocurrency giant FTX, Signature Bank had tried to separate itself from the sector. Its chief operating officer Eric Howell had told the Financial Times it wanted to reduce its share of crypto-related deposits. He stated, “we’re not just a crypto bank and we want that to come across loud and clear.”

Last week, cryptocurrency-focused lender Silvergate reportedly announced it was winding down its operations, after it previously noted it was “less than well capitalised” after depositors demanded their money back. The bank believed a voluntary liquidation was the best route.  

Another development in the Silicon Valley Bank collapse saw UK banking giant HSBC buy Silicon Valley Bank UK for £1. The move helps protect 3,000 startups.

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