Regulators decided to shut down Signature Bank after it “failed to provide reliable data and created a lack of confidence in the bank’s leadership,” said Adrienne A. Harris, New York State’s superintendent of financial services.
“Everyone is breathing hard today, and maybe I’m missing it, but I think everything should settle down,” Lloyd Blankfein, who was the chief executive of Goldman Sachs during the 2008 financial crisis, said in an interview.
It was hard to tell whether shareholders were reacting to actual vulnerabilities they spotted in the financials of those companies, or to the possibility that they would meet the same fate as Silicon Valley and Signature. Neither was there an obvious reason for why companies as large as Charles Schwab, with roughly $350 billion in deposits, and as small as Western Alliance, with $62 billion in deposits, got caught in the cross hairs. Silicon Valley Bank had roughly $175 billion in deposits before last week, and Signature had under $100 billion before it was shut down.
“Schwab has gotten a lot bigger, and the question is: Did they make the same mistakes SVB did?” asked Robert Siegel, a business school lecturer at Stanford.
Schwab released a statement Monday saying it was “well positioned to navigate the current environment,” and called itself “a safe port in a storm.”
Anticipating a blood bath on Monday, First Republic, the nation’s 14th largest bank, said a day earlier that it could grab $70 billion if needed from sources including the Federal Reserve and JPMorgan Chase, the nation’s largest bank by assets. Its shares still lost nearly three-fifths of their value on Monday — at one point touching $30, a low they had not touched since the end of 2010.
PacWest Bancorp, a Los Angeles bank that lends to small and medium-sized businesses, also sought to quell concerns about its stability, emphasizing on Monday that it had access to $14 billion in funds through a mix of cash, easily sellable securities, a credit line from the Federal Home Loan Bank of San Francisco and access to the Federal Reserve’s discount window, a borrowing program that provides fast liquidity.