Merrill’s 4Q loss expected to deepen

The firm may take a $15 billion loss, more than double the $7.9 billion first estimated.

Merrill Lynch & Co. Inc. is expected to take a fourth-quarter $15 billion loss stemming from soured mortgage investments, more than double the $7.9 billion first estimated, according to a report in The New York Times.
The loss “far exceeds” the $12-billion hit that many Wall Street analysts had forecast, according to the report, which cited people who have been briefed on the broker’s plans.
To shore up its balance sheet, Merrill is now in discussions with investors in the U.S., Asia and the Middle East, including American private equity firms, to raise $4 billion in the coming days, said the Times.
A spokeswoman for Merrill declined to comment.
The firm will announce its fourth-quarter earnings next week.
The developments underscore the toll that the mortgage crisis is taking on Wall Street’s largest banks.
After John A. Thain took over as the chairman and chief executive last month, the company sold a $5.6 billion stake to Temasek Holdings (InvestmentNews, Dec. 21), which is controlled by the government of Singapore, and Davis Selected Advisers, a money management firm in Tuscon, Ariz. (InvestmentNews, Jan. 2).
In recent months, the Government of Singapore Investment Corp., invested $9.7 billion in UBS AG, Citigroup Inc. sold a $7.5 billion stake to the Abu Dhabi Investment Authority and the China Investment Corp. invested $5 billion into Morgan Stanley.