Merill Lynch posts loss of 4.6 bln dlrs, sheds assets

Wall Street investment giant Merrill Lynch on Thursday announced a quarterly loss of 4.6 billion dollars, driven by hefty writedowns from its bets on the US real estate market.

Merrill, which has been roiled by its exposure to the US subprime mortgage crisis, also said it would shore up its capital with the sale of some assets.

It announced the sale of its 20 percent stake in financial news and data group Bloomberg for 4.425 billion dollars.

Related: Fed: No more bailouts, except Fannie Mae and Freddie Mac

Merrill said it “is also in negotiations” to sell a controlling interest in Financial Data Services for at least 3.5 billion
dollars.

Merrill was forced to write down over nine billion dollars in soured investments, largely linked to bets on US mortgage investments that have been hit by a horrific housing slump after years of sizzling growth.

“Our core franchise continues to perform well despite the extremely challenging market environment,” said John Thain, chairman and chief executive who took the reins in December at the storied Wall Street firm pummeled by massive credit losses linked to the US housing downturn.

“Against this backdrop, we increased our excess liquidity pool to a record level of 92 billion dollars and significantly reduced our exposures in key asset classes. Importantly, with the transactions we announced today, we are bolstering our capital base and continue to move forward on our risk management and strategic growth initiatives.”

Thu Jul 17, 4:56 PM ET

Source: AFP

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