BNP creates distressed unit to profit from gloom

LONDON, Sept 4 (Reuters) - French bank BNP Paribas has created a distressed finance group as the economic and financial downturn allows investors to buy assets at discount prices, it said on Thursday.

Alain Dib will lead the new unit, reporting to Frederic Janbon, global head of fixed income, and Dominique Remy, global head of financing businesses, BNP Paribas said. Monique Hill will head the operation in the United States, reporting to Dib.

'BNP Paribas believes that the current market dislocation and economic outlook will bring attractive business opportunities in the fields of distressed trading, rescue financing and turnaround investing,' the bank said.

Investment banks such as Morgan Stanley <MS.N> and Deutsche Bank <DBKGn.DE> have distressed debt desks in London, where traders buy and sell loans of troubled companies, sometimes at a fraction of their face value.

Banks can profit if the price of the loan in the secondary market goes up, or by earning a stake in the company if a debt-for-equity swap is implemented in a debt restructuring.

Other investment banks' distressed debt funds have lost money as economies worsen the price of some loans have fallen.

Cortefiel, a Spanish retailer, was recently trading at about 42 cents to the dollar, having last year traded at about 70 cents to the dollar.

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