Close Brothers, Lazard, Bank of America, Rothschild and Barclays Capital are leading the drive among Europe's investment banks, advisory boutiques and hedge funds to expand their distressed debt and restructuring teams ahead of a potential rise in company default and bankruptcies.

Recruitment firms in London are reporting increased interest from institutions looking for specialists. Tara Capital, a Swiss investment consultant, said hedge funds were targeting the sector. More than a third of respondents to its recent hedge fund survey said they intended to increase their exposure to the distressed field.