Wilbur L. Ross (New Jersey, November 1937) has been in Spain this week. In an interview with Expansión, the U.S. investor, president and managing director of WL Ross & Co. admits that with an unemployment rate of 27% he was not expecting to see buoyant cities like Madrid, Barcelona or Bilbao. “I am very impressed by the determination of the Government and the Spanish bank executives to face the problems. I leave the country calmer than when I arrived”, the millionaire added, who according to the Forbes magazine, has a patrimony of 2600 million dollars (around 2000 million Euros).
Ross, specialized in investment in distressed assets, firms being restructured o nearing bankruptcy, explains his target when visiting Spain: “To study the direct investment in Spanish banks or to purchase some of the real estate subsidiaries, as well as certain assets, either through Sareb or not”. A few hours after our interview, he was having a meeting with some of the executives from Sareb: “we see important discounts on the assets of the bad bank”. “We believe they have done well in applying them in order to be protected from future losses. We even think it could have a profit”, he declared.
On the other hand, the nationalized institutions have put the subsidiaries of real estate services on sale, such as Bankia with Bankia Habitat, Catalunya Banc with Catalunya Caixa Inmobiliaria or NCG Banco with UGAS. “This is a business we know well in the United States and we could transfer that experience over here”, he adds. He also declares that “we could buy portfolios of default credits”.
Several vulture funds, such as Apollo, Centerbridge, Cerberus or Fortress, have been analyzing this type of real estate assets for months and even years, but Ross does not think he has arrived too late. “There are still 750.000 properties to be sold, aren´t there? And Sareb has given a time limit of 15 years to get rid of these assets, although we understand it will not take as much time. The bad bank has just put on sale its first portfolio of properties in Seville and Valencia for 200 million Euros.
Ross´s firm has a broad experience in the acquisition of nationalized institutions. In the United States it has bought five banks from the FDIC, such as BankUnited in Florida or Sun National Bank in New Jersey. At this side of the Atlantic it has acquired Northern Rock and Bank of Ireland. For this reason, and in view of the good results obtained, they are ready to look into the nationalized Spanish banks, such as NCG Banco and Catalunya Banc.
The U.S. investor admits that housing prices in Spain “could continue dropping another 10% from the current levels”. “Should the correction go any further, some problems would arise”. He considers that “if it is not the best time to invest in Spain, it is getting very near”.”It is clear to us that Spain is understanding its problems, not only the dramatic situation of its real estate sector, but also the loss of competitiveness, the high production costs, etc”. That is why Ross believes that the Government “is doing things well and, even though any progress will take time, the seeds for growth have already been planted”. There are not only advances in Spain, but also in the Eurozone. “Remember that when the crisis started, when Greece burst, the European Union had not the correct tools to face any of this”.
Ross praises the way the European Central Bank has faced the crisis, mainly since Mario Draghi holds the presidency. He remembers the key moment when the Italian declared that he would anything which is necessary in order to save the Euro. “I believe the crisis would have finished earlier if Draghi had lead the bank sooner”, he adds. “The institution was obsessed with the idea that its only mission was to control prices, but now inflation is the last problem Europe is facing”. However, he explains that the ECB should have more importance as a sort of tax authority at European level.