* Flowers sees a wave of assisted deals in Europe
* Flowers says governments resist taxpayer-backed deals
* Flowers: It's like phases of coming to terms with illness
* Comments less blunt than 2009 remarks that caused furore
By Greg Roumeliotis and Simon Meads
BERLIN, March 1 (Reuters) - Three years ago Christopher Flowers caused a furor when the prominent U.S. private equity executive said buyouts of failed banks were great because the government took the losses while investors reaped the profits.
He is doing it again.
The head of J.C. Flowers & Co, which focuses on financial institutions buyouts and has about $9 billion under management, said at an industry conference on Thursday that he still likes assisted deals, in which the government offers guarantees against losses and other incentives to investors in troubled banks.
This time his focus is on Europe, where he said "we are going to see a wave of assisted deals."
"Governments resist doing this, which is natural, to be honest," Flowers said at the annual SuperReturn International conference in Berlin. "It's like the phases of coming to terms with illness, the denial and ultimately acceptance. European governments are doing this; they have to do this."
Troubled banks have cost governments tens of billions of dollars in the last few years since the financial crisis of 2008, and bailouts are politically unpopular and a tricky subject for regulators.
The former Goldman Sachs Group Inc banker's comments come after he hit a raw nerve in a speech at a January 2009 conference in New York, where he said the beauty of assisted deals was "we have the upside; they have the downside."
Later that year, U.S. regulators put in stricter rules for bank investments by private equity and other investors, nearly drying up what had promised to be an extremely lucrative opportunity for these firms.
Private equity executives, investment bankers and deal lawyers privately blamed those remarks -- at least in part -- for the hardening of the U.S. government's stance on private equity investments in banking.
To be sure, Flowers' latest comments were less blunt than those he made in 2009.
"It's actually the cheapest alternative for the government," Flowers said. "Also competition for these deals from investors improves the terms of the assisted deals for governments."
In recent years, Flowers has looked at deals in Spain, where the government is encouraging mergers and takeovers of ailing savings banks, known as cajas, in an attempt to consolidate the industry and force banks to recognize steep losses from a housing crash.
Flowers said his firm has participated in four government-assisted deals.
At the time of his 2009 speech, he was part of a consortium that was buying failed U.S. bank IndyMac, renamed OneWest. As part of that deal, Flowers and the other investors entered into a loss-sharing agreement with the U.S. Federal Deposit Insurance Corp. OneWest has since bought two other U.S. banks.
His most famous deal, however, was the 2000 purchase of failed Long-Term Credit Bank (LTCB) of Japan along with buyout firm Ripplewood Holdings.
Flowers said in the case of LTCB, which was renamed Shinsei, investors paid 50 pct of tangible book value. The government protected LTCB against future loan losses on virtually all loans and each individual loan had its own loan loss reserve.
"If the loan defaulted, the government paid us the net amount of the loan," Flowers said. "But if the loan paid off we collected the loan loss reserve as a profit. We made roughly $800 million off collecting the loan loss reserve." (Reporting By Greg Roumeliotis and Simon Meads in Berlin; Writing by Paritosh Bansal in New York; Editing by Gerald E. McCormick)