26 Mar 2009
March 26 (Bloomberg) -- Michel Lowy quit as Deutsche Bank AG's Hong Kong-based head of distressed debt trading in Asia, adding to the biggest German bank's loss of its global and European distressed debt chiefs.
Lowy's departure, announced to staff March 23 and expected in early April, comes as the Frankfurt-based lender considers merging its distressed debt and credit teams under Asia head of global credit trading Sajid Javid, said a person with direct knowledge of the situation, who declined to be named as the plans are private.
Deutsche Bank on March 2 said global distressed debt head Martin Dent and European chief Julian Nichols resigned, without giving reasons. The company plans to maintain its distressed debt business and Colin Fan is assuming leadership of the unit, spokesman Armin Niedermeier said at the time.
"People are thinking: Why would I invest in Asia when I can get assets for 25 percent less in Australia and sleep at night?" Scott Bache, a distressed debt lawyer with Clifford Chance LLP, said in a phone interview from Hong Kong today. "Until those asset prices come up a bit, I suspect we'll see more departures as executives get frustrated."
The distressed debt market has an estimated $50 billion to $100 billion of capital to invest globally, Blake Dawson and PricewaterhouseCoopers LLP said in a report earlier this month, making it an active segment of the financial services industry at a time when the global credit crisis has curbed lending.
Asset Prices
Even so, distressed debt transactions are hard to complete in Asia, where most deals cross borders and where asset prices haven't slumped as much as in other continents, according to Bache, who has contributed to studies on the subject.
Belgian national Lowy, 38, declined to comment when contacted at his office today. He plans to start his own distressed debt venture in Hong Kong by the end of the year, another person familiar with the situation said.
Debt becomes distressed when investors think a borrower may fail to make payments on its obligations. Distressed debt managers typically seek to profit by buying assets at below their face value, providing high-yield financing that could give rights to equity and opportunities to restructure companies before selling them at a higher value.
Deutsche Bank spokesman Michael West in Hong Kong declined to comment today. Lowy's resignation was reported earlier by the Financial Times.
