May 23, 2011
As banks across Europe clean up their balance sheets, it is causing a feeding frenzy among hedge funds and private-equity firms hungry for their troubled assets.
Many marquee funds are flocking around the dozens of European lenders that recently have ratcheted up efforts to get rid of soured loans and other assets, a legacy of profligate lending and investing before the financial crisis.
Banks from the U.K., Ireland, Germany, Austria, Greece, Italy, Portugal and Spain have been unloading tens of billions of dollars worth of assets—from loans to finance major U.S. construction projects and leveraged buyouts to slices of securities composed of risky residential mortgages.
The buyers are hedge funds and private-equity shops that are taking advantage of banks' desperation to sell, and are therefore able to grab the assets at bargain-basement prices.
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