P.E. Big Shots Are Buying Banks Personally

Private equity firms have been wary of buying banks for fear of getting caught up in the web of banking regulations and supervisio by the Federal Reserve. But with banking stocks trading at record lows, some of the biggest names in buyouts are getting hungry. So what to do? They’re just buying banks personally, rather than through their firms.

Wilbur Ross is the latest to get in on this action. Chris Flowers already made this move.

From Bloomberg’s ace Jon Keehner:

Wilbur L. Ross, the investor who made billions turning around distressed steel and textile companies, will buy a majority stake in First Bank and Trust Co., giving him a platform to purchase more banking assets.

The agreement allows Ross, who previously said he was targeting regional lenders, to acquire 68.1 per cent of the shares in the Indiantown, Florida-based community bank, subject to regulatory approval, Ross said today in a statement.

The bank has “good opportunities” to expand, Ross said in a Bloomberg Television interview today. “We view the whole financial services sector as a very interesting one.”

Ross joins J. Christopher Flowers, founder of private- equity firm J.C. Flowers & Co., in purchasing lenders personally, rather than through their firms. Buyout funds are wary of becoming bank holding companies, a status that may trigger restrictions on non-banking activities and the amount of debt they can take on.

Ross, who heads the WL Ross & Co. buyout firm, has a pattern of acquiring one company in a struggling industry and augmenting it by buying similar firms.


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