Investment analyst downgrades Bermuda’s fintech bank – The Royal Gazette

Created: January 17, 2023 7:44 am

Jefferies analyst Ken Usdin has cut Signature Bank from “buy” to “hold”

A New York bank approved by the Bermudian Government to provide US banking services to Bermuda-licensed fintech companies was downgraded last week by an investment analyst to “hold” from “buy”.

Investment firm Jefferies cut its price target for the bank’s stock to $124 from $185.

Shares fell marginally to $118 midday Monday.

The cut to “hold” by the formerly bullish analyst comes after the stock was down 67 percent year-to-date.

Also, CoinDesk cited a report from Ken Usdin, an analyst at Jefferies, who said Signature Bank’s management’s decision to shrink its digital asset deposit business is understandable given the recent turmoil in the cryptocurrency industry.

But the analyst’s report said shrinking crypto deposits, reportedly by as much as $10 billion and replacing them with wholesale loans costing around 4.25 percent, would have a negative impact on net interest margin and net interest income that was understated.

Signature Bank, a New York-based full-service commercial bank, agreed to provide a full range of banking services to companies that meet the standards of Bermuda and the bank, a government statement said four years ago.

Signature was held up as the answer to Bermuda’s fintech banking problem.

David Burt, the Prime Minister, said at the time that Bermuda had 66 fintech companies incorporated on the island, but the absence of banking services for fintech companies was a problem.

Burt said: “Banking for the fintech sector has been a significant challenge worldwide. Banks have been reluctant to take on the risk of handling digital assets for fear of falling foul of global compliance regulations.

“Signature Bank’s willingness to consider Bermuda-licensed businesses for banking services is a significant vote of confidence in, and endorsement of, Bermuda’s efforts to create a leading high-standard fintech regulatory regime.”

“Bermuda stands out by providing regulatory certainty combined with a world-renowned reputation for transparency and the highest standards of global compliance.

“Signature Bank’s approval shows 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.”