Wilbur Ross on His Distressed Bank Strategy

| About: SPDR S&P (KRE)

Summarizing his strategy, he is looking for:

  • Regional Banks: No issues of trading and derivatives
  • One in each major region: leading consolidation through acquisitions and mergers. Already in Michigan, Florida and New Jersey, and looking for something in Southern California and Washington/Oregon
  • Downside protection: prefers FDIC assisted, but competition is reducing the supply

It is worth pointing out that Sun Bancorp (NASDAQ:SNBC) was his first non FDIC assisted transaction. Also worth listening to his comments on Commercial Real Estate:

  • CRE down 40% from its peak
  • 37% of the regional banks loans
  • usually only 5% to 8% equity to assets.

You know what I think: it is a risk but possible to classify, bound and follow its progress.

Disclosure: Long SNBC