Hedge funds and banks offer to buy stranded deposits at Silicon Valley Bank

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Hedge funds are offering to buy startup deposits at Silicon Bank (SVB) for as little as 60 cents on the dollar. semaphore 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 about how much unsecured deposits will eventually be recovered after bank assets are sold or wound up.

Companies such as Oaktree, known for investing in distressed debt, are approaching startup businesses after SVB’s SIVB.
The seizure by the Federal Deposit Insurance Corp (FDIC), the report said.

Traders at investment bank Jefferies have also been contacting startup founders with deposits in the bank, offering to buy their deposit claims at a discount, Information Notified separately.

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

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

The Silicon bank was taken over by the US Federal Deposit Insurance Corporation on Friday to repossess its deposits after raising concerns about the financial health of depositors. A two-day run on the bank stunned markets, wiping out more than $100 billion in market value of US banks.

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