WL Ross remain in the hunt for EBS

WL Ross & Co chief executive Wilbur Ross said his investor group remains in the bidding for the EBS, even as it is in talks with the Government about new capital targets for the country’s fifth-largest lender.

The Central Bank said banks will have to increase their capital levels and that EBS must raise an additional €438 million to reach a core Tier 1 capital ratio of 13.5%.

This means the lender will have to raise a total of €963m by the end of December. The capital is in addition to €350m the Government injected into EBS this year, giving it control of the lender.

The new capital requirement “changes the arithmetic,” Ross said in an interview in New York. “We’re still bidders, and we’re in negotiations with the Government over the implications of it.”

The Government is seeking to sell EBS to reduce lenders’ reliance on the state.

WL Ross, the New York-based leveraged buyout firm, is part of an investor group bidding for EBS that includes Washington-based private equity firm Carlyle Group and Dublin-based Cardinal Asset Management. That group and Irish Life & Permanent were selected on October 22 as the final EBS bidders.

About €35 billion from an €85bn international aid package for Ireland, agreed on November 28, is earmarked for the banks.

This pushes the potential cost of rescuing lenders to as much as €83bn, more than half the size of the economy.

The country’s lenders were reliant on a government guarantee of €147bn on their liabilities as of September 30.

The European Commission said October 11 it will investigate the government rescue of EBS because it may have distorted competition in the market.

Ireland’s finance ministry said the probe won’t delay the sale of EBS, “which will continue to run in parallel to the European Commission procedure.”