New York takes possession of Signature Bank, appoints FDIC as receiver

The New York Department of Financial Services, took possession of New York-based Signature Bank "in order to protect depositors," the regulator said.

The agency appointed the Federal Deposit Insurance Corp. as the receiver of Signature Bank. The bank had total assets of roughly $110.36 billion and total deposits of roughly $88.59 billion as of Dec. 31, 2022.

The FDIC said it established a bridge bank to facilitate the receivership. On March 12, the agency transferred all of Signature Bank's deposits and substantially of its assets to Signature Bridge Bank NA, which will operate as a full-service bank as the FDIC markets it to potential buyers.

A bridge bank is a chartered national bank that operates under a board appointed by the FDIC and "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," according to the FDIC's release.

The FDIC said it hopes to "maximize the value of the institution for a future sale."

Signature Bank's senior management was removed, and the FDIC named Greg Carmichael, previous president and CEO of Fifth Third Bancorp and current executive chairman of Fifth Third's board, as CEO of Signature Bridge Bank.

Normal banking activities will resume Monday, March 13 and depositors and borrowers will become customers of Signature Bridge Bank. They will have uninterrupted access to their funds, according to the release.

The announcements came two days after California took possession of Silicon Valley Bank, the banking unit of SVB Financial Group, citing inadequate liquidity and insolvency. The Silicon Valley Bank failure is the second-largest U.S. bank failure ever.

Signature Bank is now the third bank to shut down within the past week. The California Department of Financial Protection and Innovation is overseeing the voluntary liquidation of Silvergate Bank, the bank unit of Silvergate Capital Corp., without appointing the FDIC as the receiver.

"[The New York Department of Financial Services] is in close contact with all regulated entities in light of market events, monitoring market trends, and collaborating closely with other state and federal regulators to protect consumers, ensure the health of the entities we regulate, and preserve the stability of the global financial system," the New York regulatory agency said in its statement.

The Treasury Department, Federal Reserve and the FDIC said in a joint statement that depositors of both Silicon Valley Bank and Signature Bank will have full access to all of their deposits starting March 13.