LONDON -- The concept of volure investing has crossed the Atlantic.

Financial sources say the banks, brokers, and investments funds that have built up the market for troubled companies and distressed assets in the United States over the past five years have been setting up shop in London.

Bank of England, Britain's central bank, initially expressed reservations about the newcomers, but has recently given them the green light.

"There's a whole wave of people who have come over," one U.S. banker said in an interview. He and others said about a dozen U.S. financial institutions had put teams in London, several in the last few months, to trade European company debt.

Bankers Trust, Continental Bank, Chemical Bank, J.P. Morgan, Lehman Brothers, Lazard Freres, Salomon Brother, and others are among those buying and selling distressed debt from a London base.

The cycles of recession and economic recovery in the United States and Europe help explain the migration.

Bargain Bonanza

The collapse in the 1980s of America's savings and loan institutions and the related market in high-yield junk bonds was grim news at the time. But those bonds have been a bonanza for bargain-hunters, who snatched them up cheap since the market recovered and were, by 1992 and 1993, among the best-performing in the U.S.

Investors are hoping to catch the same wave of bust and boom in Europe.

Einar Hafstad, who heads an investment team in the London area for Cargill, a big U.S. agricultural processor and commodities trader, recently told a recent investment conference that the amount of nonperforming corporate and real estate debt in Europe might exceed $500 billion.

Robert Tyrwhitt-Drake, who heas a team doing "value-impaired asset" trading at Bankers Trust in London, says that more than $40 billion of additional distressed debt was created in Europe in 1993, and that 1994 will be at least in line with that figure.

The merging market is good news for banks that lent to troubled or collapsed companies like Brent Walker, Polly Peck, Isosceles, or parts of the old Robert Maxwell empire, and that are now willing to unload that debt by accepting payment of, say, 80%, 40%, or even 20% of the face value of the loans.

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