(Reuters) – Short sellers may have raked in $2.29 billion in profit in the past three sessions, as they took advantage of a selloff in regional bank shares following the collapse of SVB Financial Group and Signature Bank, S3 Partners said.

The S&P 500 regional banks index is down about 18% since Friday when the FDIC shut down SVB Financial Group due to a liquidity crisis at the bank that sent shockwaves through the financial sector. The index is down about 34% for the month.

SVB Financial and Signature Bank are among the top five most profitable shorts among regional banks this year, the research firm said in a client note.

Short sellers have pocketed $3.53 billion so far in March on a mark-to-market basis, according to S3.

“SIVB and SBNY short sellers are sitting on massive mark-to-market profits but have no way to realize those profits at the moment,” S3 Managing Director Ihor Dusaniwsky said.

These short positions will stay open until the Nasdaq exchange and DTC determine these shares as delisted and worthless, Dusaniwsky added.

Short sellers profit from stock declines by borrowing shares of companies that they believe are overvalued, selling them, and then buying them back at a lower price later.

(Reporting by Mehnaz Yasmin and Medha Singh in Bengaluru; Editing by Savio D’Souza and Anil D’Silva)

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