US regulators closed the New York-based Signature Bank, making it the second bank in the nation to fail in less than a week following Silicon Valley Bank (SIVB.O).
Details on The New York’s Signature Bank collapses as making it 2nd US bank to be shut down
As the bank’s receiver, the Federal Deposit Insurance Corporation (FDIC) will normally liquidate the bank’s assets to repay its clients, including depositors, and other parties.
The Silicon Valley Bank, one of the most well-known lenders in the world of technology entrepreneurs, struggled and ultimately failed, necessitating intervention from the US federal government. According to data, the shares of the bank in distress fell by more than 60%.
The FDIC said in a statement that in order to protect depositors, it transferred all of the deposits and nearly all of the assets of Signature Bank to Signature Bridge Bank, N.A., a full-service bank that it will run while seeking a buyer for the institution.
A bridge bank is often a nationally chartered bank that is run by a board that is selected by the FDIC. It buys some assets from a bank that has failed as well as its liabilities and depositors.
There were 40 Signature Bank locations nationwide, including ones in New York, California, Connecticut, North Carolina, and Nevada.
The FDIC said that all banking operations, including online banking, would resume on Monday, March 13, 2023.
“Customers of depositors and borrowers will automatically change to Signature Bridge Bank, N.A. They will continue to get the same level of customer service and access to their money through ATMs, debit cards, and check writing as previously. Official checks from Signature Bank will continue to be cleared.”
Additionally, the FDIC advised borrowers to carry on with their regular loan payments.
As of December 31, 2022, Signature Bank has total assets of USD 110.4 billion and total deposits of USD 82.6 billion.
As receiver, the FDIC will run Signature Bridge Bank, N.A. “to continue banking services in the communities formerly served by Signature Bank” and “to maximise the value of the institution for a future sale.”
Meanwhile, US President Joe Biden stated in a statement on Sunday (local time) that he was “firmly committed” to holding those responsible for this mess fully accountable as well as to continuing our efforts to strengthen oversight and regulation of larger banks to ensure that we do not find ourselves in a similar situation in the future (local time).
In addition, Biden said he will speak on “how we can maintain a resilient banking system to defend our historic economic recovery,” the White House said in a statement.