Wilbur Ross sees a thousand bank closure chances

NEW YORK: The collapse of 158-year-old Lehman Brothers and distress sale of Merrill Lynch and Bear Stearns could be followed with as many as a thousand bank closures in the ongoing financial crisis, believes billionaire investor Wilbur Ross.

In an interview with a website, the legendary investor said that there could be a lot more bank closures in the coming months, and added that this could create significant investment opportunities for many.

Wilbur Ross is Chairman and CEO of WL Ross and Co LLC, a principal investment firm specialising in restructuring, buyouts, and industry consolidations, which he founded in 2000.

The firm invests in financially distressed companies and also joins hands with other investors in case of larger transactions.

WL Ross is said to have nearly 70 per cent of its assets in cash, making its position very suitable for participating in distress sale deals.

Admitting that he would be looking at picking up some small institutions, Ross said, "There will be opportunities, but we will need federal assistance in them, because what we're mainly looking for is stable sources of deposits, not so much the loan portfolio."

"I do think a lot of the regional ones will (close), just as they did in the last savings and loan crisis in the 1990s," the website quoted Ross as saying.

The ongoing crisis in the global financial markets deepened recently as Lehman Brothers filed for the biggest ever bankruptcy in the world, Bank of America bought over Merrill Lynch in a distress sale and the government rushed in to save the world's largest insurer AIG.

Ross said that there would be too many people willing to provide capital to the large financials, which makes them less of a bargain than smaller banks.

When asked about his views on Bank of America's purchase of Merrill Lynch, Ross said that he didn't think that Merrill was in that dire a position.

"I think people in general felt better about Merrill's situation than about Lehman. I think ever since John Thain came in, he's done a wonderful job trying to fix what was a very difficult situation," Ross said.

He also noted that this was really now the second successful turnaround for Thain. "He (Thain) saved Merrill, went into BoFA ... Temasek, for example, went into something like a $5 a share profit out of this. So it's not a tragic ending."

"It will be very interesting to see where Thain ends up in the Bank of America hierarchy," Ross added.