Analysts had estimated that Merrill Lynch would announce a markdown of about $12 billion when it reports fourth-quarter earnings next week, adding to an $8.4 billion charge in the previous quarter. Losses on bets related to U.S. mortgages prompted the exit of Chief Executive Officer Stan O'Neal in October and his replacement by John Thain a month later.
Merrill is trying to raise $4 billion from investors in the U.S., Asia and the Middle East to shore up its finances, the newspaper said, citing the same people. U.S. and European banks and securities firms including Merrill have already turned to Asian and Middle Eastern governments for about $34 billion.
"It's going to be a tough year for investors,'' said Hugh Young, who oversees $50 billion at Aberdeen Asset Management Asia Ltd. in Singapore. "Even if we don't see a technical recession in the U.S., it'll definitely feel like one.''
Merrill and Citigroup Inc. lost almost half their market value in the past year after financial-market "turmoil'' that U.S. Federal Reserve Chairman Ben S. Bernanke said yesterday has hurt the economy.
Citigroup, Bank of America
Citigroup, the biggest U.S. bank, may post about $14 billion of write-downs when it reports fourth-quarter earnings next week, JPMorgan Chase & Co. analysts estimated today. Bank of America Corp. may announce write-downs linked to collateralized debt obligations of about $5 billion, they said.
The world's biggest financial institutions have announced about $100 billion in write-downs and loan losses sparked by the U.S. subprime mortgage slump. Zurich-based UBS AG, Europe's biggest bank by assets, said today this will probably be another difficult year for the industry, urging shareholders to back its plan to raise $11.8 billion from Singapore and the Middle East.
Merrill said last month it's raising as much as $6.2 billion from Singapore's Temasek Holdings Pte. and New York-based money manager Davis Selected Advisors LP.