Merrill executives say firm regains strength

BOSTON (Reuters) - Merrill Lynch & Co Inc MER.N, which suffered heavy losses as it wrote down billions in bad loans during the recent credit crunch, said on Monday it can rebuild its financial strength.

At a presentation sponsored by UBS in New York, Merrill's chief financial officer and treasurer told analysts the company is focusing more sharply on risk management, is generally happy with its balance sheet, and sees room to grow.

"We're very, very comfortable with the balance sheet that we have and, more importantly, the credit quality that's on the balance sheet," Nelson Chai, Merrill's chief financial officer said at the conference. He said the company has $44 billion in equity capital.

Merrill's share price rose 1.5 percent, or 72 cents, to $49.17, on the New York Stock Exchange.

Chai made the presentation along with Eric Heaton, the company's treasurer.

Chai said he expects Merrill will be able to post a return on equity, which measures how efficient a company is in generating profit from its assets, in excess of 20 percent.

Last month, Merrill posted its third straight quarterly loss and said it would cut an additional 2,900 jobs after recording more than $6.5 billion in write-downs on soured housing market loans. At that time, Merrill Chief Executive John Thain said April was generally better than March.

Since Thain took the top job late last year, the company has worked to shore up its balance sheet. It issued billions of dollars in new equity and plain-vanilla debt with maturities as long as 30 years, Chai said.

Merrill's global wealth management unit, already one of the industry's biggest, is expected to help boost the company's overall profit, executives said.

Asked about the company's real estate assets in the United Kingdom, Chai said they were not the best the company have inherited through a purchase. He said the loans average less than 70 percent of the projects' values, which is a lot lower than the ratio on most subprime lending.

Chai also said the company will try to reduce its illiquid assets, saying "We'll continue to trade down as we have opportunities."

Chai and Heaton also said at the end of the first quarter, $82 billion of Merrill's assets could not be easily valued, up from $79.8 billion at the end of December.

(Reporting by Svea Herbst-Bayliss; editing by John Wallace/Jeffrey Benkoe)