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Signature says it is ‘not just a crypto bank’ as it sheds deposits

Signature Bank plans to offload as much as $10 billion in deposits tied to the cryptocurrency industry, a U-turn for a U.S. lender that has achieved rapid growth after aggressively courting digital assets.

The move comes as turmoil engulfs the crypto industry in the wake of falling token prices and the bankruptcy of the FTX exchange, a Signature client. The New York-based bank’s shares have fallen more than 50 percent this year after being the best-performing stock in the KBW Bank index last year.

About 23 percent of Signature’s $103 billion in customer deposits as of mid-November were related to the crypto industry. It is now seeking to reduce the share to less than 20 percent and eventually less than 15 percent of total deposits, Chief Operating Officer Eric Howell said at an industry conference Tuesday.

“We are not just a crypto bank and we want that to come across loud and clear,” he said.

Reducing crypto exposure meant Signature would leave “about $8 billion to $10 billion in deposits in that space, which we can easily cover through cash and loans,” Howell said.

Signature is one of the only federally regulated US banks known to have taken large-scale deposits from crypto clients, having started the business four years ago with a decision to include crypto exchanges, stablecoin issuers and bitcoin miners as clients. to accept. This helped triple Signature’s deposits from $33.4 billion in 2017.

FTX, led by Sam Bankman-Fried, was one of the world’s largest crypto exchanges before its failure in November. Signature said last month that its deposit ratio with FTX and its related companies is less than 0.1 percent of its overall deposits.

Signature’s share price fell about 4.5 percent in New York trading on Tuesday. His other businesses include wealth management and fund lending, through which he bankrolls capital calls to investment funds on behalf of clients.

In a further sign of concerns about losses in the crypto market spilling over to US lenders, Silvergate, another US bank that has taken deposits from crypto customers, this week defended its role in accepting deposits from FTX and Alameda Research, a trade group founded by Bankman-Fried.

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