Signature Bank Closes its Doors After 20 Years of Service

Scott Shay, Joseph dePaolo, and John Tamberlane established Signature in 1999 with assistance from Israel’s biggest lender, Bank Hapoalim. On a personal bio page, Mr. Shay expressed himself as a “thought leader, and author of several widely read books on profound issues facing the Jewish community.” The bank went public in 2004.

A New York financial institution, Signature Bank, with a business of real estate lending that had in recent times planned to win crypto currency deposits, closed its doors abruptly on Sunday, after regulators claimed, that keeping the bank open could bring harm to the stability of the entire financial system. 

Silicon Valley Bank, a lender to start-ups, was left struggling to meet customer withdrawal requests due to some ill-timed financial decisions after it imploded on Friday. Similarly, Signature became one of the few banks to welcome cryptocurrency deposits, just before the overheated industry blew up last year.

Business customers of signature bank started calling after Silicon Vally Bank’s trouble began to spread last week, to ask if their deposits were safe. Many were worried that their deposits could be at risk because, like business customers of Silicon Valley, most had more than $250,000 in their accounts. The Federal Deposit Insurance Corporation, the entity that seized Silicon Valley, insures deposits only up to $250,000.

Signature was known in New York for providing banking service to real estate companies and law firms, and for catering to the bank needs of wealthy families in the area. Among the few financial institutions that opened its doors to taking deposits of crypto assets, signature was one of them. That ended up being a fateful decision because the bottom fell out of crypto assets after the collapse of FTX and an ensuing criminal investigation. Another cryptocurrency-focused bank, Silvergate Bank, was forced to voluntarily close last week.

“This story has more to do with crypto, huge error in judgment by veteran bankers,” said Christopher Whalen of Whalen Global Advisors, which specializes in analyzing and consulting on financial institutions. “Result was the same in a deposit run.”