Hedge funds hire bankers to run portfolios bought from lenders

Tim Wallace
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BIG BANKS are selling off major portfolios of loans to shrink down in the wake of the financial crisis, and top staff are leaving too to manage the portfolios, according to a report out today from Interim Partners.

Private equity groups and hedge funds are among those buying the loan books, then hiring bankers for up to £2,000 per day to manage and restructure the portfolios.

Alternatively the managers are paid a share of the returns they make by restructuring the portfolios, which Interim Partners believes could give a higher income than the day rate.

Banks including Lloyds and RBS have been particularly active selling off portfolios. Private equity group Cerberus paid £860m for two corporate and commercial loan portfolios late last year.

Other examples of investment in the sector include KKR raising $2bn (£1.2bn) to invest in distressed debt, while Apollo has raised $3.9bn for European distressed assets since 2008.