Signature Bank To Shed Large Amount Of Crypto Deposits

Signature Bank, One of the few Banks to do business with the wild world of Cryptocurrencies, will get rid of up to $10 billion in Deposits tied up to the Industry. “We’re not just a crypto bank and we want that to come across loud and clear,” Chief Operating Officer Eric Howell, said at an Investor Conference Tuesday.

New York City Midtown-based Signature, launched a Blockchain-based Payments platform a few years ago, and Crypto enthusiasts sent a flurry of Deposits. About 30% of the Bank’s $100 billion in Deposits came from Crypto Exchanges, Bitcoin Miners, and others. It made a single $100 million Loan secured by Bitcoin, which has been paid off.

Signature’s Stock soared from $75 a share to $375 in 2021, but this year the Shares have retreated back to $115. Last month the Bank said the failed FTX and related Entities accounted for less than 0.1% of Deposits, but this and other assurances from Management don’t seem to resonate when Investors are bearish about all things Crypto. “Earnings uncertainty remains fairly high” at Signature, said Christopher McGratty, a Keefe Bruyette & Woods Analyst.

Other Banks caught in the Crypto downdraft include Midtown-based Metropolitan Commercial Bank, which collected nearly 20% of Deposits from Crypto firms, including $350 million from Voyager Digital, a Gramercy-based Crypto Exchange that filed for Bankruptcy in July.

Three U.S. Senators have asked the California-based bank Silvergate Capital to Release all Records of Fund transfers with FTX.

Until dipping into the Crypto pool, Signature was in the business of writing Loans for Apartment Landlords and Small-Business Owners, primarily in the New York area. It plans to shed unwanted Deposits in the next several weeks, and it is expected to replace the Funding with Market-Rate borrowings that are expected to weigh on Earnings.

“We believe the decision . . . to reduce exposure represents capitulation that there is a long road ahead to determine crypto-industry winners,” wrote Analyst Jake Civello of Janney Montgomery Scott.










NYC Wins When Everyone Can Vote! Michael H. Drucker