Merrill posts $5.15 billion loss as risky assets offloaded

by Gill Montia

Story link: Merrill posts $5.15 billion loss as risky assets offloaded

Wall Street investment bank, Merrill Lynch, has posted a $5.15 billion loss for the third quarter of 2008.

The scale of the loss was above analysts’ expectation and reflected a $9.5 billion writedown on mortgage-related investments.

In the dark days that surrounded the collapse of Lehman Brothers, in mid-September, Merrill agreed to be acquired by Bank of America in an all share deal that valued the firm at around $44 billion.

It has since been offloading its riskier assets and this partly accounts for the size of its latest (and fifth consecutive) quarterly loss.

Meanwhile, revenue for the quarter totalled $16 million, compared with $380 million in the same period of 2007.

The bank, which is the largest brokerage in the US, has now written down around $50 billion in relation to the credit crisis.

Its chairman, John Thain, promises to continue to reduce exposure and to bolster the firm’s balance sheet by making use of the US Government recapitalisation scheme.

Merrill says it will be issuing $10 billion in preference shares and warrants to the US Treasury.

The firm also reported that the sale of its 20% stake in financial news group, Bloomberg, resulted in a pre-tax gain of $4.3 billion.