4,000 jobs at risk as Merrill Lynch writes down $6bn

by Gill Montia

Story link: 4,000 jobs at risk as Merrill Lynch writes down $6bn

Merrill Lynch, the New York-based stock broker, has recorded a loss of $1.96 billion for the first quarter of 2008, compared with a net profit of $2.16 billion in the first three months of 2007.

The firm has added $6 billion to the $24 billion already written down since the onset of the sub-prime mortgage crisis, last summer.

Of the $6 billion, $1.5 billion related to debt instruments and $3 billion to an adjustment to protection on certain kinds of debt.

The broker, which employs around 63,000 people worldwide, is reducing staff numbers by 4,000, having already cut 1,100 jobs since the beginning of this year.

In announcing the results, John Thain, Merrill’s chairman and chief executive, stressed that the business remains well-capitalised, having raised $7.5 billion in new money at the end of last year.

In February, the US Securities and Exchange Commission (SEC) formalised its investigation into the firm, which is being scrutinised for accounting procedures surrounding its sub-prime mortgage portfolio.

An examination by the SEC began in October of last year, following accusations that Merrill had not fully informed shareholders of the value of its sub-prime investments before announcing its third-quarter results.

Meanwhile, Federal prosecutors have begun preliminary investigations into Merrill’s sub-prime valuations.