Wilbur Ross Seen Cutting Bank of Cyprus Ties to Work for Trump

  • Invested alongside Russian billionaire Viktor Vekselberg
  • WL Ross fund would still own stake in Mediterranean lender

Wilbur Ross, U.S. President-elect Donald Trump’s pick for commerce secretary, intends to sever his ties to Bank of Cyprus Pcl, but the private equity firm that bears his name isn’t planning to sell its stake in the lender, according to two people familiar with the matter.

The billionaire investor sold WL Ross & Co. a decade ago, and the firm is under no obligation to sell its 1.6 percent stake in the Mediterranean lender. Ross does plan to step down as vice chairman of Bank of Cyprus, the people said, and he’d have to give up his continuing roles at his eponymous firm as chairman, chief strategy officer and a member of the investment committee if confirmed.

Wilbur Ross

Photographer: Christopher Goodney/Bloomberg

Ross, 79, will also probably sell his rights to as much as half of the incentive fees available to partners on investments, according to a person familiar with the plans who asked not to be named because the details aren’t final.

Ross, who’s worth about $2.9 billion according to the Bloomberg Billionaire’s Index, made big bets on troubled European banks after the financial crisis and has reaped handsome profits in the U.K. and Ireland. At Bank of Cyprus, which he’s trying to turn around with the help of former Deutsche Bank AG Chief Executive Officer Josef Ackermann, the results haven’t been so good. His firm won’t make money until the bank’s shares jump by almost 50 percent from their current price. 

Vekselberg Stake

A fund overseen by WL Ross is one of the biggest shareholders in the Cypriot lender, which is the nation’s largest. Russian billionaire Viktor Vekselberg owns 5.5 percent through his Bahamas-based Renova Group. Ross sold his firm to asset manager Invesco Ltd. in 2006.

Jeaneen Terrio, a spokeswoman for Invesco, declined to comment, as did a spokeswoman for Bank of Cyprus in London. An assistant to Ross didn’t respond to a request for comment.

Three years into its turnaround plan, the Cypriot lender is looking to list in London as early as next month to help boost share trading. Investors voted earlier this month to set up a holding company in Ireland as part of the process, which will also see the firm keep its Nicosia registration but cancel membership in the Athens Exchange. Irish companies with a London listing, unlike Cypriot firms, are eligible for inclusion in the U.K.’s FTSE indexes, which enables index-tracking funds to buy shares.

WL Ross probably won’t sell its stake in the bank because it bought shares at about 24 cents, the people added. Bank of Cyprus has slumped about 26 percent since its 1 billion-euro ($1.04 billion) rescue was completed in July 2014, closing trading on Wednesday in Nicosia at 15 cents.

‘Existential Treats’

Bank of Cyprus CEO John Hourican, a former Royal Bank of Scotland Group Plc investment banking chief, has overseen a restructuring of the 117-year-old lender. The company has cut its reliance on emergency liquidity assistance from 11.4 billion euros to about 400 million euros, while it increased deposits by 10 percent and reduced nonperforming loans by 2.6 billion euros, or 23 percent, in the first nine months of this year.

While the level of bad loans is still “eye-wateringly high,” the bank has sold off its “existential threats” and now has good momentum, Hourican said last month in a Bloomberg Television interview. The bank had 62 million euros of profit in the first nine months, after five straight annual losses.

While Ross’s investments in Bank of Cyprus and a stake in Greek lender Eurobank Ergasias SA for an undisclosed amount haven’t paid off, he has fared better in the U.K. and Ireland. In Britain, his fund teamed up with Richard Branson’s Virgin Money Holdings UK Plc in 2011 to acquire the best parts of failed bank Northern Rock from the government.

Ross sold the last of his stake in Virgin Money in November to bring total proceeds of about 550 million pounds ($681 million) on a 360 million-pound investment. In 2014, he sold his shares in Dublin-based Bank of Ireland Plc for a profit of about 500 million euros.

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