New York financial institution Signature Bank was closed down by regulators on Sunday, in a move that is being widely interpreted as fallout from the shuttering of Silicon Valley Bank on Friday.
The Federal Deposit Insurance Corporation (FDIC), which ensures that bank deposits of up to $250,000 are guaranteed, assured customers that all of these money – no matter the amount – would be returned in full.
Since its foundation in 1999, Signature Bank has become a key part of New York’s financial system. This includes specialist services like financing the purchase of taxi medallions, a type of (very expensive) licence for the iconic New York City cab, and escrow services for law firms.
It also caters to the real estate market and to high-net-worth families, including the Trumps and the (related) Kushners.
In 2018, it entered the crypto market, becoming one of the few traditional banks to accept cryptocurrency deposits (standing at around $16.5 billion).
Like Silicon Valley Bank (SVB), most of its deposits $79 billion out of a total $88 billion, were above the $250,000 FDIC threshold, and therefore uninsured.
Following the collapse of SVB, Signature Bank customers became worried that their own deposits were at risk, prompting something of bank run – although this had seemingly slowed down by Sunday morning, according to sources speaking to the New York Times.
New York State Governor Kathy Hochul said: “Many depositors at these banks are small businesses, including those driving the innovation economy, and their success is key to New York’s robust economy.”
In closing the bank, New York banking regulators and the FDIC warned that keeping it open “could threaten the stability of the entire financial system”.
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