Crisis Investing: Q&A With Wilbur Ross

NEW YORK ( TheStreet) -- Wilbur Ross, CEO and Chairman of private equity firm W.L. Ross & Co., is known as a bottom-fishing investor.

His firm, part of fund giant Invesco ( IVZ) has taken stakes in companies in a range of industries, from steel to autos to shipping to banking. Ross has been a particularly active investor of late.
Wilbur Ross

Just this week his firm announced the purchase of Deutsche Bank Berkshire Mortgage, a residential real estate lender, from Deutsche Bank ( DB) and a $50 million infusion into New York's Amalgated Bank. Other investments by Ross in recent weeks include Diamond S Shipping Group and Bank of Ireland ( IRE). TheStreet caught up with Ross Tuesday at the Bloomberg Dealmakers Summit.

This interview has been edited for clarity.

TheStreet: Many dealmakers at this conference don't want to buy anything right now until they get more certainty about what will happen in Europe. You just got off a panel where economist Nouriel Roubini says he sees a greater than 50% chance of a Eurozone crisis leading to a severe global recession--possibly worse than the one that followed the bankruptcy of Lehman Brothers. You, on the other hand, are doing deals all over the place. Why are you seemingly so much more sanguine than others?

Wilbur Ross: No, I think there's a lot of trouble in the economy, but the question is can you find things where that's priced in. If it's already priced in, that's fine, because our perspective is a couple year perspective. It's not a trading perspective. We're not a hedge fund looking for today tomorrow and next week. So our feeling is if we can find something that seems fundamentally undervalued, and if it's well-capitalized enough to get through the troubled period then if the price is low enough we'll do it. We've given up trying to pick the exact bottom.

TheStreet: You've made investments in several U.S. banks in the last couple of years, from BankUnited ( BKU) to Sun Bancorp ( SNBC) to -just this week--Amalgamated in New York. What is your vision for the U.S. banking sector?

Ross: I think that the net effect of the ring fencing between investment banking and retail has to be that profit margins are going to widen in retail banking; so we're focused on retail banks. The big banks historically have really gotten a high rate of return out of the investment bank side--out of proprietary trading. Now that they really can't do that anymore, they're going to have to make money the old-fashioned way: on the spreads between deposits and interest rates on loans.

TheStreet: What is your biggest worry right now?

Ross: My biggest worry right now is that with the way governments are dysfunctional both in Europe and to a degree here that things will get out of control on the downside.

TheStreet: And what's the likelihood of that happening?

Ross: I think here it's relatively small, but in Europe it's more significant. I think what Europe needs--whatever happens with Greece, whether it defaults or it doesn't, the crisis there is not going to be over. They need fundamental structural reform. I think the Europeans have got to build a huge ring fence around the peripheral sovereign nations and set in motion a kind of European version of the TARP funding for banks that we have here and if they can do that quickly and on a big scale I think it'll solve the problem. If they keep trying to do it by small increments it won't solve the problem because people won't have confidence that they've got their arms around it

-- Written by Dan Freed in New York.

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