Irish

Friday 1 August 2014

US billionaire labels stake in BoI his best investment since crisis

Donal O'Donovan

Published 21/05/2013|04:00

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Billionaire US investor Wilbur Ross (pictured) has called his almost 10pc stake in Bank of Ireland shares his best investment since the financial crisis.

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In a broad-ranging interview, the Bank of Ireland board member said Bank of Ireland and the Irish economy were performing far better than forecast when the banking system was "stress tested" by BlackRock

"I think Bank of Ireland is turning out to be a really good investment," he said in an interview with Bloomberg TV's Francine Lacqua and Manus Cranny. Shares in the bank have risen by about 80pc since Mr Ross and other North American investors bought into the bank in 2011, he said.

US-based Mr Ross, along with Canada's Prem Watsa, led a 2011 investment by North American funds into Bank of Ireland that effectively saved the bank from nationalisation.

Between them, five funds bought a combined 35pc stake in the bank for €1.12bn at 10 cents per share.

Yesterday, those shares closed at 18.1 cents each, up slightly on the day and valuing Mr Ross's almost 10pc stake in Bank of Ireland at more than €500m.

Mr Ross said that he invested in Ireland because of the modern high-tech economy here, including the huge role that modern pharmaceuticals and internet companies play here.

Unlike other distressed European economies Ireland did not need "structural reforms," he said. "Ireland has proper labour laws. Ireland didn't need structural reform, all it needed was to fill the hole left by the banking crisis," the US investor said.

And he said he was not concerned by the lack of repossessions by Bank of Ireland and other Irish lenders. The fact that homeowners were left with debt in Ireland even after repossession was a very powerful deterrent from walking away from mortgages, he said.

In that context modifying mortgage debt was working well, he said, with 86pc of mortgages modified by Bank of Ireland now sticking to their new terms, he added.

The US billionaire said he saw Spain as another investment opportunity because the country was now follo wing Ireland in beginning "to come to grips" with its financial crisis.

"I'm going to Spain later on this week because, I think, Spain too has a real economy," Mr Ross said. "It's got terrible problems, 27pc unemployment and a banking system that I think is just beginning to recognise the severity of its problems."

Greece and Italy had done a "good job" reining in their finances, Mr Ross said.

But he believes France is "going in the opposite direction" under Socialist President Francois Hollande.

Irish Independent

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