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Global Markets in Turmoil as Signature Bank Becomes Third-Largest Failure in U.S. Banking History

Updated: Mar 15, 2023

Two major U.S. banks, Signature Bank and Silicon Valley Bank, have collapsed within days of each other, causing widespread market disruption and leaving billions of dollars in deposits stranded. State regulators closed New York-based Signature Bank on Sunday, just two days after California authorities shuttered Silicon Valley Bank. The two failures have rocked global markets and represent the third and fourth largest bank failures in U.S. history.

Picture: Kumaon Jagran

In a joint statement, the U.S. Treasury Department and other bank regulators confirmed that all depositors of Signature Bank will be made whole, and "no losses will be borne by the taxpayer." Signature Bank reported deposit balances totaling $89.17 billion as of March 8, with assets totaling approximately $110.36 billion as of December 31. New York banking regulators appointed the Federal Deposit Insurance Corporation (FDIC) as receiver for later disposition of the bank's assets.

Meanwhile, Silicon Valley Bank had approximately $209.0 billion in total assets and about $175.4 billion in total deposits as of December 31, 2022. The FDIC has established a "bridge" successor bank to Signature Bank, which will enable customers to access their funds on Monday. Silicon Valley Bank customers will also have access to their deposits starting on Monday. The federal government has announced actions to shore up deposits and stem any broader financial fallout from the collapse of the tech startup-focused lender.

Signature Bank, a commercial bank with private client offices in five U.S. states, 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. The bank had also 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 have confirmed that shareholders and certain unsecured debtholders of both banks will 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.

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