Merrill reports $4.89bn loss

Merrill Lynch posted a much larger-than-expected $4.89 billion (Dh18bn) quarterly loss after writing down soured debt, and unveiled plans to sell billions of dollars of assets – including a part of its lucrative brokerage business – to shore up capital.

Chief Executive John Thain called the quarter "difficult and disappointing."

Thain joined Merrill Lynch in November to turn around a company that had been rocked by massive write-downs of complex debt securities. But so far this year, the company has racked up more than $7bn of net losses for common shareholders, as bad investment and business decisions made under ousted former chief executive Stanley O'Neal have haunted Thain.

Merrill said it is in discussions to sell a controlling stake in its Financial Data Services unit, which provides mutual fund administrative services and retail banking products, to an undisclosed party in a transaction valuing the unit at more than $3.5bn.

The quarterly loss applicable to common stockholders was $4.89bn, or $4.97 per share, after a profit of $2.07bn, or $2.24 per share, a year earlier.

Thain said a further downgrade to the bank from either ratings agency would force Merrill Lynch to post significantly more collateral on its trades. Results included losses of $3.5bn from exposure to CDOs, $2.9bn related to hedges, $1.7bn from an investment portfolio of the company's US banks, and $1.3bn from residential mortgages.

The company has a Tier-1 capital ratio of about 9.5 per cent, well above regul-atory minimums.



The number

$7bn: of net loss has been racked up by the company this year