Deposit flows during the 2023 failures of Silicon Valley Bank, Signature Bank, and First Republic Bank showed that depositors tied to the digital asset sector and active escrow depositors were more likely to run. Uninsured exposure increased pressure, with more than 99.5% of Signature Bank’s active escrow balances uninsured. Active escrow deposits included pooled customer funds for investment-related companies and banking-as-a-service financial technology firms. Active escrow deposits represented 13% to 15% of Signature Bank’s deposits before the run. Beneficial owners of active escrow funds were described as having the ability to move funds quickly. Active escrow balances at Signature fell sharply between March 7 and March 17, and First Republic’s active escrow balances tied to investment-related companies declined as well.
"FDIC staff said depositors associated with the digital asset sector and active escrow depositors were more likely to run. Uninsured exposure intensified pressure, with more than 99.5% of Signature active escrow balances uninsured. Wire activity showed how quickly mobile funds left stressed banks during the 2023 runs."
"Signature Bank had active escrow deposits that included pooled customer funds for investment-related companies, including firms facilitating digital asset investment, and banking-as-a-service financial technology companies. Active escrow deposits made up 13% to 15% of SBNY's deposits before the run. The FDIC explained that beneficial owners of active escrow funds most likely had the ability to move funds quickly."
"Active escrow deposits at SBNY plummeted 88% between March 7 and March 17, 2023. The category dropped 83% in two business days, the largest percentage decline among SBNY's primary deposit types. FRB also held active escrow deposits tied to investment-related companies, including sweep accounts and cash management accounts. Those balances fell 52% during the same period."
"In 2023, SVB failed on March 10 after depositors began running on March 9. SBNY failed on March 12 after runs started on March 10. FRB remained open under stress until May 1, when regulators closed the bank and JPMorgan Chase Bank acquired it. The FDIC tied all three failures to broad-based deposit runs."
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