After SVB bankruptcy
US authorities close more banks
03/13/2023 10:43 am
The US bank failure continues to cause turbulence: After the collapse of the Silicon Valley Bank, the supervisory authorities closed the next money house. Signature Bank from New York has not been able to find a buyer or any other solution.
New York’s Signature Bank was shut down by regulators on Sunday – the second major bank failure in three days. Signature had also fallen into a crisis of confidence as a result of the turbulence at SVB Financial. Signature has also bet on crypto banking, but the bet fell through after the sector imploded and regulators cracked down on banks’ exposure to digital assets. The bankruptcy is the third largest in US history.
The bank wanted to find a buyer or another solution to strengthen its finances by morning, but according to several informants it has not been able to complete a sale in time. On Sunday, the New York Department of Financial Services intervened and placed the bank under receivership of the Federal Deposit Insurance Corp. (FDIC)
Signature customers will get all their deposits back, including funds over the $250,000 limit for state deposit insurance, according to banking regulators. The shareholders would not be protected, the management had been removed. Signature and SVB were classified as systemic risk to the financial system in an unusual joint decision by the US Federal Reserve and US Treasury, giving regulators the flexibility to protect uninsured deposits. Regulators hoped that these and other measures to protect bank deposits would limit reactions from terrified customers in the morning.
Signature shares were down 23 percent on Friday, having lost more than 75 percent over the past 12 months. According to informants, some customers, frightened by the rapid collapse of the other companies, have started to transfer their money from the bank to other institutions in the past few days. At the end of 2022, the bank had $110 billion in assets and $88.6 billion in deposits. In terms of deposits, it was the 30th largest bank in the US last year. At the end of December, 89.7 percent of deposits were uninsured by the FDIC.