Amid the demise of Silvergate Bank and the troubles facing Silicon Valley Bank (SVB), market analysts believe Signature Bank (SBNY) may be a buy as it is seen as the “latest game in crypto city,” according to Jared, a Wells Fargo stock analyst. Shaw. The Silvergate sell-off sent SBNY shares plunging on Friday, falling more than 13% at the start of the day’s trading sessions on Wall Street.
Piper Sandler and Wells Fargo analysts suggest Signature Bank may be a buy
The crypto markets experienced a tumultuous week following the disclosure on March 8, 2023 of the bankruptcy of Silvergate Bank. The bank, which is a friend of cryptocurrencies, informed the public that it was closing down its business 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, the SVB stock, was halted on March 10, 2023, after a drop of more than 60% the previous day. On Friday, regulators shut down Silicon Valley Bank and the US Federal Deposit Insurance Corporation (FDIC) He took care as trustee, creating the “National Deposit Insurance Bank of Santa Clara”. The new entity now has FDIC-insured deposits from SVB.
On Friday, Signature Bank (Nasdaq: sbny) experienced a decline of more than 13% in trading, but as of 11:30 pm ET, losses were down to 8.55%. Piper Sandler Market Analysts Mark Fitzgibbon and Gregory Zingone commented on Thursday that “Since Signature Bank’s Signet platform also had numerous cryptocurrency clients, the two banks were frequently mentioned together. Consequently, we are confident that Signature shares will continue to come under some pressure in the near term.”
In addition, Piper Sandler analysts noted that Signature’s balance sheet is significantly larger than Silvergate’s and that SBNY has “plenty of other depository verticals to depend on.”
Jared Shaw, Wells Fargo stock analyst, wrote about Signature Bank and suggested that the action could be an opportunity. “The signing (is the) latest game in crypto-town,” Shaw said. “It is the only major bank that still has an on-ramp in place for institutional cryptocurrency investors. While SBNY has restricted its exposure to this area, this could provide additional pricing power.” The Wells Fargo analyst added:
Additionally, SBNY could use this as a catalyst to move away from in-kind deposits for service to a fee-for-service model, which may 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 companies was not the main reason for Silvergate’s financial difficulties. However, the Wells Fargo analyst also emphasized that SBNY’s exposure to cryptocurrency assets is more restricted.
“The difficulty for SI was being a monoline cryptocurrency provider,” Shaw’s investor memo concludes. “At the end of the year, SBNY capped its cryptocurrency exposure to 15% of deposits, which should help lessen liquidity volatility as we saw in 2022.”
What do you think about the future of banking in the cryptocurrency industry? 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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