April 16, 2008 / 3:22 AM / 11 years ago

Merrill Lynch to write down further $6-8 billion: report

TOKYO/NEW YORK (Reuters) - Investment bank Merrill Lynch & Co MER.N will announce $6 billion to $8 billion of asset write-downs in its first quarter results on Thursday, the Wall Street Journal reported on Wednesday, citing a person familiar with the matter.

A Merrill Lynch bull symbol is seen on a sign above the main entrance to its headquarters in New York, January 17, 2008. REUTERS/Mike Segar

The latest write-downs would increase total debt losses since October to more than $30 billion, the paper said. The setbacks will contribute to a third straight quarterly net loss at Merrill, the longest losing streak in its 94-year history.

Merrill Lynch spokeswoman Jessica Oppenheim declined to comment.

Investors have been bracing for more bad news from big U.S. banks reporting their first-quarter results this week as the housing market collapse and credit market turmoil has taken a big toll on their balance sheets.

On average, analysts who cover Merrill have told clients they expect $6 billion to $8 billion of write-downs.

“In this environment, anything is plausible,” Sandler O’Neill + Partners analyst Jeff Harte said.

The real key to Merrill’s actual results will be what steps the firm has taken to reduce its exposure to risky assets going forward.

“It’s how much is written down. If the losses are bigger and it’s because they reduced exposure, that may not be so bad,” Harte said. “The actual earnings number is less relevant than the health of underlying business.”

The Wall Street Journal also reported that Merrill is preparing to slash 10 to 15 percent of jobs in some struggling business areas, such as bond financing.

Such cuts, too, are not totally unexpected. Rival banks such as UBS, Morgan Stanley, Goldman Sachs and Lehman Brothers have laid off employees, and recruiters expect the current slump will lead to new rounds of layoffs.

Currency traders in Asia said the article on Merrill caused a slight dip in the U.S. dollar against the yen JPY= but that the reaction was muted because investors had been expecting more such write-downs.

JPMorgan Chase (JPM.N), which is taking over hard-hit investment bank Bear Stearns BSC.N, on Wednesday reported more than $5 billion of loan losses and asset write-downs. Regional bank Wells Fargo (WFC.N) also reported lower quarterly results Wednesday.

Earlier in the week Wachovia WB.N, the number four U.S. bank, posted a surprise first-quarter loss as losses from its mortgage portfolio worsened. It also cut its dividend and raised $7 billion of capital.

Reporting by Eric Burroughs in Tokyo and Joe Giannone in New York; additional reporting by Olesya Dmitracova in London, editing by Will Waterman and Dave Zimmerman

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