Another American bank collapses
A third US bank has toppled in as many days as shockwaves have been sent around the world.
On Monday morning Australian time, New York-based Signature Bank collapsed.
US regulators said state authorities had shut down the bank.
Signature Bank was one of the main lenders for cryptocurrency exchanges.
The US Treasury, Federal Reserve, and Federal Deposit Insurance Corporation said in a joint statement that the bank had officially closed for good.
“Signature Bank, New York, New York, … was closed today by its state chartering authority,” they wrote.
“All depositors of this institution will be made whole.”
They also added that “no losses will be borne by the taxpayer” arising from Signature Bank’s collapse.
“This step will ensure that the US banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth,” the statement added.
According to filings with the corporate regulator, as reported by CNBC, Signature Bank had US$110.4 billion in assets and US$88.6 billion in deposits.
In the past 12 hours, Signature Bank’s share price on NASDAQ dropped by an eye-watering 22.87 per cent.
The move came several months after Signature tried to reduce its exposure to the crypto sector, especially in the wake of the implosion of FTX.
Signature Bank had 38 offices across several US states.
The US banking system has had a tumultuous few days.
On Friday Australian time, Californian-based Silvergate Capital announced it had gone into voluntary liquidation, after racking up $1 billion (A$1.5 billion) losses in the past quarter, as well as its shares being down 67 per cent.
Less than 24 hours later, Silicon Valley Bank went into receivership.
The bank was the 18th largest in the country and had a market capitalisation of around $40 billion as well as assets of more than $300 billion.
It was the second-biggest bank failure in US history.
SVB’s collapse is expected to have far-reaching consequences for tech and start-ups, with many of them using debt facilities at the bank.
US building managers at Silicon Valley Bank’s Manhattan branch reportedly called the police after a group of tech founders showed up and attempted to pull out their cash.
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