PRIVATE equity house JC Flowers has built a £1.5bn cash pile to spend on British banks’ mortgage books after failing in its attempt to buy part of Northern Rock.
The US buyout giant, which focuses on financial services, is believed to have changed its strategy after losing out to Virgin Money in the bidding war for the “good bank” of the Rock last month.
Founder Christopher Flowers, once a rising star of Wall Street in charge of the financial institutions group at Goldman Sachs, last month said he was keeping a “a lot of cash on hand” to weather global market turmoil and to stay ready for buyout opportunities.
JC Flowers, which declined to comment, could buy assets worth hundreds of millions of pounds and transfer them into OneSavings, the venture it formed when it put £50m into Kent Reliance Building Society.
It has reportedly held discussions with a number of banks already.
Britain’s high street lenders are looking to sell off books of mortgages in order to boost capital ratios because of tougher regulatory demands and fears that a break-up of the euro would unleash a new round of turmoil.
Flowers’ investments over the global financial crisis have reduced the size of his third $7bn (£4.49bn) fund and the group recently took a hit on the MF Global Holdings crisis, after the commodities broker filed for bankruptcy protection.
The collapse of futures broker MF Global cost New York-based Flowers nearly $50m.