New York's Signature Bank collapses, becomes 2nd US bank to be shut down

New York-based Signature Bank was shut by regulators in the US, becoming the second bank in the country after Silicon Valley Bank (SIVB.O) to have collapsed within a span of less than a week.

The Federal Deposit Insurance Corporation (FDIC) has been appointed as a receiver, which typically means it will liquidate the bank's assets to pay back its customers, including depositors, and others.

One of the most prominent lenders in the world of technology startups, the Silicon Valley Bank, which was struggling, collapsed on Friday, forcing the US federal government to step in. The crisis-hit bank's shares tumbled over 60 per cent, data showed.

To protect depositors, the FDIC transferred all the deposits and substantially all of the assets of Signature Bank to Signature Bridge Bank, N.A., a full-service bank that will be operated by the FDIC as it markets the institution to potential bidders, FDIC said in a statement.

A bridge bank is typically a chartered national bank that operates under a board appointed by the FDIC. It assumes the deposits and certain other liabilities and purchases certain assets of a failed bank.

Signature Bank had 40 branches across the country - New York, California, Connecticut, North Carolina, and Nevada.

Banking activities will resume Monday, March 13, 2023, including online banking, FDIC said.

"Depositors and borrowers will automatically become customers of Signature Bridge Bank, N.A. and will continue to have uninterrupted customer service and access to their funds by ATM, debit cards, and writing checks in the same manner as before. Signature Bank's official checks will continue to clear."

The FDIC also said loan customers should continue making loan payments as usual.

Signature Bank had total assets of USD 110.4 billion and total deposits of USD 82.6 billion as of December 31, 2022.

"As receiver, the FDIC will operate Signature Bridge Bank, N.A. to maximize the value of the institution for a future sale and to maintain banking services in the communities formerly served by Signature Bank."

Meanwhile, US president Joe Biden said in a statement on Sunday (local time) said, "I am firmly committed to holding those responsible for this mess fully accountable and to continuing our efforts to strengthen oversight and regulation of larger banks so that we are not in this position again, US president Joe Biden said in a statement on Sunday (local time).

Biden added that he will deliver remarks on "how we will maintain a resilient banking system to protect our historic economic recovery," according to a statement by the White House.

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