Third Largest Bank Failure in US History: Signature Bank Collapses Following Silicon Valley Bank

The third-largest bank failure in U.S. history occurred over the weekend as regulators closed New York-based Signature Bank, just two days after Silicon Valley Bank’s collapse, Reuters reports.

The Federal Deposit Insurance Corporation (FDIC) took control of Signature, which held $110.36 billion in assets and $88.59 billion in deposits at the end of last year, according to New York state’s Department of Financial Services.

The sudden collapse of Silicon Valley Bank, the 16th largest lender in the U.S., had shaken investors who were unnerved by the speed at which it was toppled by customer withdrawals, erasing over $100 billion in market value from U.S. banks.

However, the U.S. Treasury Department and other bank regulators issued a joint statement, assuring all depositors of both banks that they would be made whole, and that “no losses will be borne by the taxpayer.”

The FDIC has established a “bridge” successor bank for Signature’s depositors and borrowers, naming former Fifth Third Bancorp CEO Greg Carmichael as its new CEO.

Signature Bank’s depositors and borrowers will automatically become customers of the bridge bank, and Silicon Valley Bank customers will have access to their deposits starting on Monday.

Signature Bank was a commercial bank with private client offices in several U.S. states, including California, Connecticut, Nevada, North Carolina, and New York.

It had nine national business lines, including commercial real estate and digital asset banking.

As of September, almost a quarter of its deposits came from the cryptocurrency sector, but the bank announced in December that it would shrink its crypto-related deposits by $8 billion.

The bank also had a long-standing relationship with former President Donald Trump and his family, providing Trump and his business with checking accounts and financing several of the family’s ventures.

Signature Bank cut ties with Trump in 2021 following the January 6, 2021 events on Capitol Hill, and urged Trump to resign.

Shareholders and certain unsecured debtholders of Signature Bank and Silicon Valley Bank will not be protected, and senior management of both banks have been removed.

The FDIC has assured that any losses to its Deposit Insurance Fund used to support uninsured depositors will be recovered by a special assessment on banks, as required by law.