MarketWatch: Hedge funds and banks offer to buy deposits trapped at Silicon Valley Bank


Hedge funds are offering to buy startup deposits at Silicon Valley Bank (SVB) for as little as 60 cents on the dollar, Semafor reported on 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 for how much of the uninsured deposits will be eventually recovered once the bank’s assets are sold or wound down.

Firms like Oaktree which are known for investing in distressed debt are contacting startup businesses after SVB’s SIVB, -60.41% seizure by the Federal Deposit Insurance Corp (FDIC), the report said.

Traders from investment bank Jefferies are also contacting startup founders with deposits at the bank, offering to buy their deposit claims 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.

Oaktree declined to comment on the reports. Jefferies could not be immediately reached for comment.

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

See: Silicon Valley Bank branches closed by regulator in biggest bank failure since Washington Mutual

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