Investor Wilbur Ross Likely to Buy Spanish Financial Assets

Wednesday, 10 Jul 2013 08:21 AM

 

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Wilbur Ross, the U.S. billionaire who has made 65 percent profit on his 2011 investment in a struggling Bank of Ireland (BOI), said he is likely to bid for banks or financial assets in Spain over the next few months.

Ross, whose WL Ross & Co owns 9.9 percent of BOI, said in a telephone interview that he had spent a lot of time in Spain recently and had been impressed by banking sector reforms.

"We haven't decided yet whether to buy assets or to invest in banks themselves, but the likelihood is that we'll show up bidding on something in Spain," he said.

Editor’s Note: Put the World’s Top Financial Minds to Work for You

Ross, one of the biggest international champions of Ireland's recovery, has made $2.6 billion through investing in poorly performing assets.

Spain's banks, especially those bailed out by the state in the wake of a 2008 property market collapse, are selling assets and shrinking their balance sheets to meet bailout conditions.

Several lenders, including nationalized NCG Banco, are selling their property management arms, which have already drawn interest from international funds.

Others are disposing of portfolios of consumer loans. In 2012 Spain's rescued lenders also shifted more than 50 billion euros ($64.07 billion) of soured property loans and assets into a so-called "bad bank" which will sell them off.

But a deep and persistent recession in Spain has meant that few international investors are looking to buy lenders outright and Spanish banks are reluctant to sell at very steep discounts, despite having already taken big provisions against, for instance, property asset losses.

But, in the last three years, dozens of former savings banks have been merged or absorbed by larger lenders, consolidation that had improved the outlook for profits, Ross said.

"The way they have rationalized the banking system, it's not quite finished yet but they've done a very good job consolidating institutions and making them have more of a critical mass," he said.

Spain's banks are also attractive because of their relatively robust home loan business, he said. Strict laws on mortgage repayments have meant defaults are relatively low.

"Eighty percent of the families in Spain own their residence. So home ownership has a very big significance in Spain, and that's useful from the point of view of being able to collect mortgage lending," he said.

Spain has also become a much more competitive economy since the crisis hit, Ross said, after labor law changes.

Ross said he would use a shell company NBNK, in which he bought an up to 37.8 percent stake for 8 million pounds ($12 million) last December, to pick up potential bargains.

"We continue to look at financial institutions elsewhere in Europe," Ross said. "We're mainly at the analytical phase, so we don't have anything to announce on that score right now."

Editor’s Note: Put the World’s Top Financial Minds to Work for You


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