The unexpected closure of Signature Bank over the weekend sparked a shoot-first-ask-questions-later mentality by investors as deposits flowed to biggest banks.
The unexpected demise of Signature Bank over the weekend, along with the failure of Silicon Valley Bank on Friday, ignited a shoot-first-ask-questions-later reaction among regional-bank investors as customers moved deposits to the largest U.S. banks for perceived safekeeping, observers said Monday.
Over the weekend, crypto-friendly Signature Bank SBNY was closed by regulators, even though only a minority of its deposits were tied to digital currency. The company was hit hard despite the fact that it derives most of its business from traditional commercial banking services to companies outside the world of startups and digital currencies.
Looking ahead, Marinac expects the Federal Deposit Insurance Corp. to find buyers for both Silicon Valley Bank and Signature Bank. The bank’s clients from the venture-capital community would routinely recommend the bank’s services to their portfolio companies, which made the bank’s deposits too dependent on risky startups, observers have said.
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