all about cryptop referances
Amid Silvergate Bank’s demise and the troubles facing Silicon Valley Bank (SVB), market analysts believe Signature Bank (SBNY) could be a buy as it is considered the “last play in crypto town,” according to Wells Fargo equity analyst Jared Shaw. Silvergate’s liquidation sent SBNY shares tumbling on Friday, falling more than 13% as the day’s Wall Street trading session began.
Crypto markets experienced a turbulent week following the March 8, 2023 disclosure of Silvergate Bank’s failure. The cryptocurrency-friendly bank informed the public that it was winding down its operations and liquidating its assets.
Silicon Valley Bank (SVB) has also faced financial difficulties, having been forced to sell a $21 billion bond at a loss of $1.8 billion. SIVB, SVB’s share, was halted on 10 March 2023, after a decline of more than 60% the previous day. On Friday, regulators closed Silicon Valley Bank, and the US Federal Deposit Insurance Corporation (FDIC) took over as receiver, creating the “Deposit Insurance National Bank of Santa Clara.” The new entity now has FDIC-insured deposits from SVB.
On Friday, Signature Bank (Nasdaq: SBNY ) saw a decline of over 13% in trading, but by 11:30 pm (ET) losses had narrowed to 8.55%. Piper Sandler market analysts Mark Fitzgibbon and Gregory Zingone noted Thursday that “Since Signature Bank’s Signet platform also had many cryptocurrency clients, the two banks were often mentioned together. Accordingly, we are confident that Signature’s shares will continue to be under some pressure in the near term.”
In addition, the Piper Sandler analysts observed that Signature’s balance sheet is significantly larger than Silvergate’s and that SBNY has “many other deposit verticals to rely on.”
Jared Shaw, an equity analyst at Wells Fargo, wrote about Signature Bank and suggested the stock could be a possibility. “Signature [is the] last battle in crypto town,” Shaw said. “It’s the only major bank that still has a functioning ramp for institutional investors in cryptocurrency. Although SBNY has limited its exposure to this area, this may provide some additional pricing.” The Wells Fargo analyst added:
In addition, SBNY could use this as a catalyst to move away from in-kind contributions for service to a fee-for-service model, which could be more regulatory and capital-friendly.
Shaw’s investor memo suggests that SBNY’s strategies may be superior to Silvergate’s, and that providing banking services to cryptocurrency firms was not the main cause of Silvergate’s financial difficulties. However, the Wells Fargo analyst also emphasized that SBNY’s exposure to cryptocurrency assets is more limited.
“The difficulty for SI was being a mono-line provider of cryptocurrency,” Shaw’s investor memo concludes. “At the end of the year, SBNY limited its cryptocurrency exposure to 15% of deposits, which should help reduce liquidity volatility, which we saw in ’22.”
What do you think about the future of banking in the cryptocurrency industry and do you think Signature Bank is well positioned to take advantage of this emerging market? Share your thoughts in the comments below.
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