Collapsed Signature Bank's depositors, borrowers become customers of a new bank. What you should know?
2 min read 13 Mar 2023, 04:47 PM ISTFederal Deposit Insurance Corporation (FDIC) which has been appointed as the receiver for Signature Bank, launched a new bank named Signature Bridge Bank, N.A. Signature Bridge Bank is a full-service bank that will be operated by the FDIC as it markets the institution to potential bidders.
PremiumAnother US-based bank has met its doomsday. This time it would be a New York-based commercial bank, Signature Bank! New York State Department of Financial Services shut down Signature Bank, in less than four days after the collapse of techs and startups' largest lender Silicon Valley Bank. Just like SVB, the US government is working to protect depositors and borrowers of Signature Bank as well. A new bank has been launched and Signature Bank's customers will be pulled under their ambit.
Federal Deposit Insurance Corporation (FDIC) which has been appointed as the receiver for Signature Bank, launched a new bank named Signature Bridge Bank, N.A.
Signature Bridge Bank is a full-service bank that will be operated by the FDIC as it markets the institution to potential bidders.
On Signature Bank's customers, in a statement, 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."
In general terms, a bridge bank is 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. Furthermore, the bridge bank structure is designed to “bridge" the gap between the failure of a bank and the time when the FDIC can stabilize the institution and implement an orderly resolution.
Greg D. Carmichael who recently served as the president and CEO of Fifth Third Bancorp --- will become the CEO of Signature Bridge Bank.
Appointed as a receiver, FDIC will maximize the value of the institution for a future sale and maintain the banking services in the communities formerly served by Signature Bank through the newly launched bank.
It added, "Signature Bank’s official checks will continue to clear. Loan customers should continue making loan payments as usual."
At the time of failure, Signature Bank had 40 branches across the country in New York, California, Connecticut, North Carolina, and Nevada.
The bank's activities resumed on Monday, however, with Signature Bridge Bank becoming its new face of it.
According to FDIC, the transfer of all the deposits was completed under the systemic risk exception approved earlier today. All depositors of the institution will be made whole.
"No losses will be borne by the taxpayers," it added.
However, FDIC said that Signature Bank's shareholders and certain unsecured debt holders will not be protected. Senior management has also been removed.
It further said, "any losses to the Deposit Insurance Fund (DIF) to support uninsured depositors will be recovered by a special assessment on banks, as required by law."
These actions will protect depositors and preserve the value of the assets and operations of Signature Bank, which may improve recoveries for creditors and the DIF, as per FDIC.
Overall, Signature Bank has a total asset of $110.4 billion, while its total deposits stood at $82.6 billion by end of 2022.
Signature Bank has emerged as the third-largest bank failure in United States history. While SVB has topped the charts of becoming the largest bank failure since the 2008 financial crisis.
