Hedge funds made more than $7bn in profits by betting against bank shares during the recent crisis that rocked the sector, their biggest such haul since the 2008 financial crisis.
The bumper gains came during a bleak month for banks, with the collapse of Silicon Valley Bank and the emergency sale of Credit Suisse affecting the wider sector. Amid plunging share prices, German chancellor Olaf Scholz was forced to dismiss fears about the health of Deutsche Bank and California-based First Republic was bailed out by larger rivals.
Short sellers — who borrow stock and sell it, hoping to buy it back at a lower price — made estimated total profits of around $1.3bn from short positions taken against SVB, according to data firm Ortex. A further $848mn in gains came from bets against First Republic, whose shares fell 89 per cent in March.