The New York Stock Exchange stands lower in Manhattan after global stocks fell as concerns mount that inflationary pressure on central banks will tighten monetary policy May 11, 2021 in New York City. By mid-afternoon the tech-heavy Nasdaq Composite had lost 0.6% after falling 2.2% at its session low.
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Signature bank shares fell as much as 32% on Friday and were halted at one point amid a selloff in bank stocks that continued for a second day.
Signature, one of the leading banks in the cryptocurrency industry, ended the day down 22%.
The first move came after a big day for its crypto banking peers Silvergate Capital, who announced earlier this week that he would let their bank. It was lost deeper Thursday after sections of Financial SVBwhose Silicon Valley Bank lends to tech startups, announced a plan to raise more than $2 billion in capital to help offset losses on bond sales.
By late Friday morning, the Federal Deposit Insurance Corp had closed Silicon Valley Bank and taken control of its deposits, making it the largest US bank failure since the global financial crisis.
Silicon Valley Bank’s troubles spilled over into financial stocks, as investors worried about the possibility that other banks with large bond portfolios could face similar issues, if they are forced to sell those bonds before maturity. partly for fundraising purposes. Treasuries have been falling for the past year as the Federal Reserve has been raising rates.
First Republic Bank, PacWest Bancorp, Western Alliance Bancorp were among the other names that were suspended from trading at one point for instability.
Signature has said that there is very little knowledge of crypto, but the need for Silicon Valley Bank to re-spend on the heels of the Silvergate incident has connected the two events in the minds of some people.
Signature Bank shares Friday
Valkyrie’s chief investment officer, Steve McClurg, said Signature Bank was already hurt by Silvergate’s losses, which are now close to 50% for the week. Its losses on Friday are a spillover from Silicon Valley Bank’s woes, he said.
Ed Moya, an analyst at Oanda, confirmed that Signature is caught in the middle of the two statements.
“Signature Bank gets a one-two punch as concerns grow that any crypto-related bank could be at risk and as concerns about financial instability grow for parts of the sector banking,” he said. “There are only a handful of publicly traded banks that have crypto exposure and many traders are rushing to bet against them.”
