Greenlight, Elliott Back Failed-Bank Effort

Feb 16 2010 | 3:45am ET

A pair of hedge funds is pitching in to help buy a failed bank.

Greenlight Capital and Elliott Management are among the investors who ponied up $1.1 billion to finance SJB National Bank. SJB was set up by real-estate investors Stephen Ross, Jeff Blau and Bruce Beal of the Related Cos., Bloomberg News reports. The firm does not yet have any banking operations, but won federal approval in October to bid on banks seized by the Federal Deposit Insurance Corp.

SJB raised the money in a private placement managed by Deutsche Bank. Related does not have any stake in SJB.

Alternative investment firms have been active in buying failed banks, with the Blackstone Group, Dune Capital Management, J.C. Flowers & Co., Paulson & Co., Soros Fund Management and W.L. Ross & Co. all taking part in deals for seized banks.

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