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Hedge funds and banks offer to buy deposits tied up with Silicon Valley Bank

Hedge funds are offering to buy seed deposits from Silicon Valley Bank (SVB) for as little as 60 cents per dollar, Semafor reported Saturday, citing people familiar with the matter.

Bids range from 60 to 80 cents on the dollar, the report said, adding that the range reflects expectations about how much of the uninsured deposits will eventually be recovered once the bank’s assets are sold or wound down.

Firms such as Oaktree, known for investing in distressed debt, are reaching out to start-ups after the SVB’s SIVB,
repossession by the Federal Deposit Insurance Corp. (FDIC), the report said.

Traders at investment bank Jefferies are also contacting startup founders with deposits at the bank and offering to buy their deposit receivables at a discount, The Information reported separately.

Jefferies is offering at least 70 cents on the dollar for deposit claims, the report said, citing several people with direct knowledge of the matter.

See also  "I don't see any other bank stepping in to help." Bill Ackman proposes government intervention to save parent company Silicon Valley Bank.

Oaktree declined to comment on the reports. Jefferies was not immediately available for comment.

Silicon Valley Bank was acquired by the US Federal Deposit Insurance Corporation on Friday after depositors, concerned about the lender’s financial health, rushed to withdraw their deposits. The bank’s two-day run stunned markets and wiped out more than $100 billion in market value for US banks.

To see: Silicon Valley Bank branches closed by regulator after biggest bank failure since Washington Mutual

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