Both SVB and Signature Bank were atypical banks with atypical depositors.
SVB catered to risky tech startup and Signature Bank was involved in risky crypto shenanigans.
On SVB:
>As a regional bank in the Bay Area, SVB offered services specifically designed to meet the needs of the tech industry, and soon became the largest bank by deposits in Silicon Valley and the preferred bank of almost half of all venture-backed tech startups.
On Signature Bank:
>By 2021, cryptocurrency businesses had represented 30 percent of its deposits.
>Banking officials in the state of New York closed the bank on March 12, 2023, two days after the failure of Silicon Valley Bank (SVB). After SVB failed and in light of the closure of the cryptocurrency-friendly Silvergate Bank earlier in the week, nervous customers withdrew more than $10 billion in deposits.
First Republic Bank was also an atypical bank that offered high interest rates for high-net-worth depositors by not insuring deposits and having a very high loan-to-deposit ratio:
>Fitch Ratings and S&P Global Ratings downgraded First Republic's credit rating, citing "a high proportion of uninsured deposits" from wealthy customers who are more likely to move their money elsewhere and a loan-to-deposit ratio of 111%, meaning that it had lent out more money than it had in deposits from customers.
SVB catered to risky tech startup and Signature Bank was involved in risky crypto shenanigans.
On SVB:
>As a regional bank in the Bay Area, SVB offered services specifically designed to meet the needs of the tech industry, and soon became the largest bank by deposits in Silicon Valley and the preferred bank of almost half of all venture-backed tech startups.
On Signature Bank:
>By 2021, cryptocurrency businesses had represented 30 percent of its deposits.
>Banking officials in the state of New York closed the bank on March 12, 2023, two days after the failure of Silicon Valley Bank (SVB). After SVB failed and in light of the closure of the cryptocurrency-friendly Silvergate Bank earlier in the week, nervous customers withdrew more than $10 billion in deposits.
First Republic Bank was also an atypical bank that offered high interest rates for high-net-worth depositors by not insuring deposits and having a very high loan-to-deposit ratio:
>Fitch Ratings and S&P Global Ratings downgraded First Republic's credit rating, citing "a high proportion of uninsured deposits" from wealthy customers who are more likely to move their money elsewhere and a loan-to-deposit ratio of 111%, meaning that it had lent out more money than it had in deposits from customers.