Regulators shut down Signature Bank in New York while vowing to make all depositors of the New York bank and Silicon Valley Bank in California whole.
The $110 billion-asset Signature, which had close ties to the crypto industry, was closed due to “systemic risk,” the Federal Reserve, Federal Deposit Insurance Corp., and Treasury Department said in a press release.
The FDIC created Signature Bridge Bank to operate as it seeks bidders for the institution. Greg Carmichael, who recently announced plans to retire as executive chairman of Fifth Third Bancorp, was named CEO of the bridge bank.
The regulators said Signature’s closure, as well as that of Silicon Valley Bank on Friday, would result in “no losses … borne by the taxpayer.”
“Shareholders and certain unsecured debtholders will not be protected,” the Signature Bank release said. “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.”
The Fed said it will make available additional funding to eligible depository institutions to help “assure banks have the ability to meet the needs of all their depositors.”
Silvergate Capital said earlier in the week that it would voluntarily liquidate its bank with help from its state regulator. SVB Financial quickly imploded a few days later after announcing selling a large amount of securities at a sizeable loss to shore up liquidity.