© Reuters.
Investing.com – With the demise of Silvergate Bank, investors should look to New York-based Signature Bank which has a big opportunity to recoup business in the cryptocurrency market, according to Wells Fargo (NYSE:).
At the end of the day on Wednesday, Silvergate announced that it would close. Silvergate Bank, which had become the go-to bank for cryptocurrency businesses in recent years as the big banks stayed away. Businesses, however, still have Signature Bank.
Signature is the latest to work with crypto firms according to Wells Fargo, adding that “it’s the only major bank left with a functional on-ramp for institutional cryptocurrency investors.” Although SBNY has self-limited its exposure to the space, this could provide some additional pricing power.”
“Furthermore, SBNY could use this as a catalyst to move away from in-kind deposits for service to a fee-for-service model, which could be more regulatory and capital friendly.”
Wells Fargo has an overweight rating on Signature with a price target of $185, implying a nearly 95% upside from the level of shares trading Thursday afternoon.
Some investors were quick to point out that Silvergate’s openness to cryptocurrency companies was not to blame for its financial troubles. Wells Fargo echoed that sentiment in the note, defending Signature’s model as “more diverse,” which it says has helped it offset cryptocurrency-related liquidity pressures stemming from lower trading prices. cryptocurrency values over the past year.
“The challenge for SI was to be a single provider of cryptocurrencies. At the end of the year, SBNY self-limited cryptocurrency exposure to 15% of deposits, which will help reduce volatility liquidity as we saw in 22.”