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HomeMarketSignature Bank Stock Soars. It Says Its Relationship With FTX Is Limited.

Signature Bank Stock Soars. It Says Its Relationship With FTX Is Limited.

Crypto exchange FTX filed for bankruptcy last week.

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Dreamstime

Signature Bank
said that its relationship to FTX—the cryptocurrency exchange whose collapse triggered a meltdown in the prices of digital currencies—is limited.

The bank said Tuesday that it only has a deposit relationship with FTX, and that the bankrupt crypto exchange and its related companies make up less than 0.1% of the bank’s overall deposits.

Signature (ticker: SBNY) also said it doesn’t lend on or invest in cryptocurrencies, or custody digital assets for any of its clients.

Signature’s activity within the digital asset realm involves “traditional deposit banking, including cash and treasury management services to institutional entities,” the company said.

Shares of Signature were up 8% to $150 in Tuesday trading and are on track for their largest percentage increase since Nov. 9, 2020, when they jumped 29%, according to Dow Jones Market Data.

Signature’s emphasis on its limited relationship with FTX seems to have indicated to investors that the bank has been shielded from the crypto exchange’s fallout. The bank has flourished in the digital asset industry as of late. In August, Signature garnered praise from J.P. Morgan analyst Steven Alexopoulos who deemed it “poised to be one of the key banks of the digital asset ecosystem.”

In a note published Tuesday, Jefferies analysts said the update showed the “resiliency of [Signature’s] digital deposit franchise.” The analysts noted that the bank’s exposure to FTX is “surprisingly low” given that exchanges make up the majority of Signature’s digital deposit franchise and FTX is a “top five crypto exchange by volume.”

The analysts, who rate Signature a Buy with a price target of $185, added that the bank has “never had any meaningful loan exposure to crypto assets.”

This year, Signature stock has tumbled about 54% alongside a broader pullback in crypto. The price of
Bitcoin
has fallen about 64% this year. For comparison, the
SPDR S&P Bank exchange-traded fund
(KBE) has dipped 10% over the same period.

Write to Emily Dattilo at emily.dattilo@dowjones.com

Credit: marketwatch.com

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