Wilbur Ross Seeks $4 Billion to Purchase U.S. Banks

Wilbur Ross Seeks $4 Billion to Purchase U.S. Banks

April 16 (Bloomberg) -- Billionaire financier Wilbur Ross Jr., who made his fortune turning around distressed steel and textile companies, plans to seek about $4 billion from investors including Arab sovereign funds to buy U.S. depositary banks.

Ross, 70, will talk with Gulf investors in Abu Dhabi next week about 100 to 200 so-called thrift banks, he said in a phone interview from New York today. He said some thrifts are good investments, even after a mortgage-market slump led to $245 billion of asset writedowns and credit losses at the world's biggest banks.

Regional depositary banks have ``more narrowly defined'' problems and ``a more stable base of deposits'' than cross-border lenders such as Citigroup Inc. and UBS AG, Ross said. He plans to package U.S. thrift bank acquisitions ``as a finished product'' to sovereign wealth funds, he said.

Flush with cash from record oil income, Gulf funds are among investors that committed at least $59 billion in the past year to shore up banks including Citigroup and Merrill Lynch & Co. Abu Dhabi's sovereign fund, the world's richest with estimated assets of $875 billion, agreed to invest $7.5 billion in Citigroup in November. Qatar's fund will spend as much as $15 billion on bank stakes, the Gulf state's prime minister said in February.

Thrifts Are `Vulnerable'

Thrifts are ``particularly vulnerable because their portfolios tend to be so real estate-oriented,'' and so can be bought ``at a very attractive price,'' Ross said today. Acquired banks could be combined with a mortgage business to provide stable funding for home loans that are ``essential'' to the U.S. economy even if ``singularly unprofitable'' right now.

Depositary banks are defined as those regulated by the Federal Deposit Insurance Corp. and are legally allowed to accept consumer deposits. The FDIC insures deposits at 8,534 banks and savings associations in the U.S., over 90 percent of which are community-based banks.

Washington Mutual Inc., the biggest U.S. savings and loan institution, on April 8 said it got $7 billion from a group of investors led by David Bonderman's TPG Inc. after losses on subprime loans erased 74 percent of its market value.

Citigroup stock has slumped 24 percent since it announced Abu Dhabi's investment on Nov. 26. Merrill Lynch is down 16 percent since Kuwait's fund said it bought $2 billion of convertible securities Jan. 15.

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