Merrill fundraises again as it offloads CDO exposure

by Gill Montia

Story link: Merrill fundraises again as it offloads CDO exposure

Investment bank, Merrill Lynch, has announced plans to raise $8.5 billion in new capital, after revealing that it will be writing down $10.6 billion in the third quarter of the year.

According to a report in The Telegraph, Merrill has already written down $40 billion since the onset of the credit crisis.

The bank has raised $23.5 billion in the past 12 months and is in the process of selling assets that will bring in another $8 billion.

The disposals include its 20% stake in Bloomberg, which is worth between $4.5 and $5 billion.

The bank is also selling $11.1 billion worth of mortgage-backed securities and says it has now offloaded most of its exposure to collateralised debt obligations; $4.4 billion of the third quarter writedown will relate to the sale of such securities.

It is understood that Temasek, the sovereign wealth fund of Singapore, will assist the latest fundraising with an investment of $3.4 billion.

This would be in addition to an earlier $5 billion injection of cash and could take Temasek’s share in the group above 10%.

The move could therefore require approval from regulators, including the US Committee on Foreign Investment.