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New York State Closes Bank of Silicon Valley in the US

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New York state lawmakers closed Signature Bank on Sunday, just two days after California authorities closed Silicon Valley Bank in a crash that rocked global markets.

And the New York State Department of Financial Services said it acquired Signature Bank and made it the recipient of the Federal Deposit Insurance Corporation in the bank’s second bankruptcy case within days.

The administration added in a statement that, as of Dec. 31, deposits at Signature Bank were about $88.59 billion.

As of December 31, 2022, the bank’s assets were approximately $110.36 billion, according to the New York State Department of Financial Services.

Signature Bank, a commercial bank with private client offices in New York, Connecticut, California, Nevada, and North Carolina, had nine lines of business, including commercial real estate and digital asset banking.

As of September, almost a quarter of Signature Bank’s deposits were in the crypto sector, but in December, the bank announced it would cut crypto-related deposits by $8 billion.

Officials said Sunday that shareholders and some holders of unsecured debt in Signature Bank and Silicon Valley Bank would not be protected, and that senior management at both banks had been fired.

The US Treasury and other banking sector regulators said in a joint statement on Sunday that depositors at Signature Bank would be compensated and that taxpayers would not suffer any losses.

The ministry said it was going to take decisive action to protect the US economy by building public confidence in the banking system.

These measures will ensure that the US banking system continues to play its vital role in protecting deposits and providing access to credit for households and businesses in a way that promotes strong and sustainable economic growth.

The department said that after receiving advice from the FDIC and Federal Reserve boards and consulting with the president, Secretary Yellen has approved procedures that will allow the FDIC to finalize its decision on Silicon Valley Bank, Santa Clara, Calif. ., so as to fully protect all depositors. Depositors will have access to all of their funds starting Monday, March 13, and taxpayers will not suffer any loss related to the Silicon Valley Bank’s decision.

The department continued, “We are also announcing a similar systemic risk exemption for Signature Bank of New York, which was closed by the state today.

That, and the Federal Reserve announced Sunday that it will provide additional funding to qualifying depository institutions to help banks meet the needs of all savers.

It is worth noting that the bank had a longstanding relationship with former President Donald Trump and his family, as it provided checking accounts for Trump and his company and funded many of the family’s projects.

Signature Bank cut ties with Trump in 2021 following the Jan. 6 Capitol Hill riots.

Source: Reuters + Media

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