After Silicon Valley, Signature Becomes Next Casualty

United States financial regulators closed New York-based Signature Bank on Sunday, the third largest failure in U.S. banking history, two days after authorities shuttered Silicon Valley Bank in a collapse that stranded billions in deposits. The Federal Deposit Insurance Corporation (FDIC) took control of Signature, which had $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. All of the depositors of Signature Bank and Silicon Valley Bank will be made whole, and “no losses will be borne by the taxpayer,” the U.S. Treasury Department and other bank regulators said in a joint statement. 

This is as Signature Bank Limited, a Nigerian financial institution, has said it has no affiliation with the New York-based Signature Bank that was recently shut down by United States financial regulators.

The bank, in a statement yesterday, clarified that it has no connection with any bank outside of Nigeria.

“The attention of the Bank has been drawn to recent news surrounding the closure of Signature Bank, New York, by US financial regulators on Sunday, March 12, 2023,” the statement reads.

“For purposes of clarity, we wish to inform the General Public that Signature Bank Limited has no affiliation, relationship, or connection (business or otherwise) with Signature Bank, New York, or any other Bank outside of Nigeria.

“Signature Bank Limited is a wholly owned Nigerian Bank that officially opened to customers on November 21, 2022, with its Head Office in Abuja, Signature Bank Limited has put in place robust technology and digital banking channels that will ensure customers can access its services from the comfort of their homes, offices, or at leisure.

“Signature Bank Limited is overseen by a deeply experienced and renowned Board of Directors led by Dr. Mutiu Sunmonu.

“Signature Bank Limited is committed to deliver banking to every Nigerian’s doorstep through digital channels and a focus on service excellence and customer centricity.

“We believe that the individuality and uniqueness of every customer should be celebrated.”

New York-based Signature Bank was closed by U.S. regulators on Sunday, March 12,2023.

It is the third largest bank to fall into financial failure in US history.

The development came two days after California’s Silicon Valley Bank (SVB) collapsed as depositors rushed to withdraw funds.

Signature’s failure followed Silicon Valley Bank’s Friday shutdown, the second largest in U.S. history behind Washington Mutual, which collapsed during the 2008 financial crisis. 

vestors were unnerved by the speed at which startup-focused SVB, the 16th largest lender in the U.S., was toppled by customer withdrawals. The episode last week erased more than $100 billion in market value from U.S. banks, prompting swift action from government officials over the weekend to try and restore confidence in the financial system. The FDIC established a “bridge” successor bank on Sunday which will enable customers to access their funds on Monday. Signature Bank’s depositors and borrowers will automatically become customers of the bridge bank, the FDIC said. The regulator named former Fifth Third Bancorp Chief Executive Greg Carmichael as CEO of the bridge bank.

Silicon Valley Bank customers will have access to their deposits starting on Monday, U.S. officials said on Sunday. The federal government also announced actions to shore up deposits and try and stem any broader fallout. Signature was a commercial bank with private client offices in New York, Connecticut, California, Nevada and North Carolina, and 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. Signature Bank announced in February that its chief executive officer, Joseph DePaolo, would transition into a senior adviser role in 2023 and would be succeeded by the bank’s chief operating officer, Eric Howell. DePaolo has served as president and CEO since Signature’s inception in 2001.

The bank 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 deadly Jan. 6 riots on Capitol Hill, and urged Trump to resign. In a statement, New York Governor Kathy Hochul said she hoped the U.S. government’s actions on Sunday would provide “increased confidence in the stability of our banking system.”

“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,” she said. Officials said on Sunday shareholders and certain unsecured debtholders of Signature Bank, as well as those of Silicon Valley Bank, would not be protected, and that senior management of both banks has been removed. Any losses to the FDIC’s Deposit Insurance Fund used to support uninsured depositors will be recovered by a special assessment on banks, as required by law, officials said.