OBA manager at Signature Bank, Fintech and more
Following the closure of US-based Signature Bank by New York regulators, Opposition Leader Cole Simons noted that in 2019 the government “unveiled its relationship with Signature Bank as a banking service solution for Bermuda’s fintech companies” and asked “now that this banking option is off the table , what’s next for Bermuda’s emerging digital asset and cryptocurrency industry.”
Mr Simons said: “Signature Bank, Bermuda’s banking solution for our new Digital Asset Business and our new cryptocurrency business has been shut down by New York State Regulators on Sunday. It is now under the control of the Federal Deposit Insurance Corporation. According to Reuters, this is the third largest failure in the American banking industry.
“What a blow to Premier’s Burt’s new Fintech and digital asset industries and furthermore, what will be the impact on the reputation of Bermuda Inc as the government has reportedly worked hard to promote Bermuda as the destination of choice for fintech companies looking for a place to stay.
“In a February 2019 media release, the Burt Government unveiled its relationship with Signature Bank as a banking services solution for Bermuda’s fintech companies and boasted that ‘Bermuda stands out by providing regulatory certainty combined with a world-renowned reputation for openness and transparency. the highest the standards of global compliance Signature Bank’s approval demonstrates how Bermuda is competitively positioned to advance the pace of digitization of global trade as modern technology is used in the highly regulated financial world.
“The release further stated that Signature Bank agreed to provide full banking services that include deposit account and debit card services to both BDA and US Fintech startups in the digital asset and cryptocurrency industries and provide a full range of banking services to companies that meet Bermuda and Signature Bank’s standards .
“Now that this banking option is off the table, what’s next for Bermuda’s emerging digital asset and cryptocurrency industry? Did our government perform adequate due diligence before entering into the relationship with Signature Bank? Have they provided any ongoing monitoring and due diligence since the inception of the relationship ?
“Did Bermuda regulators carry out their ongoing enhanced due diligence with New York state financial regulators?
“If they did, did they realize that as of September, nearly a quarter of deposits came from cryptocurrency, and that the bank announced in December that it would shrink its crypto-related deposits by $8 billion?! This should have been a red flag.” Again, this megabank failure is extremely alarming and has the real potential to compromise Bermuda’s financial services jurisdictional reputation.
The official press release from the FDIC said: “Signature Bank, New York, NY, was closed today by the New York State Department of Financial Services, which appointed the Federal Deposit Insurance Corporation [FDIC] as recipient. To protect depositors, the FDIC transferred all of the deposits and substantially all of the assets of Signature Bank to Signature Bridge Bank, NA, a full-service bank that will be operated by the FDIC as it markets the institution to potential bidders.
“Signature Bank had 40 branches nationwide in New York, California, Connecticut, North Carolina and Nevada. Banking operations will resume on Monday, March 13, 2023, including online banking. Depositors and borrowers will automatically become customers of Signature Bridge Bank, NA and will continue to have uninterrupted customer service and access to their funds via ATM, debit card and check writing as before Signature Bank’s official checks will continue to be cleared Loan customers should continue to make loan payments as usual.
– The transfer of all deposits was completed under the systemic risk exemption approved earlier today. All depositors in the institution will be made whole. Taxpayers will bear no loss. Shareholders and individual holders of unsecured debt will not be protected. The top management has also been removed. 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.”
We asked the government for a comment and will update if we can.
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