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Merrill Lynch to Take $15 Billion Writedown, NYT Says (Update2)
By Joseph Galante



Jan. 11 (Bloomberg) -- Merrill Lynch & Co., the third- largest U.S. securities firm, may write down $15 billion related to U.S. mortgage losses, almost twice its original forecast, the New York Times reported, citing people briefed on the plan.

Analysts had estimated that the New York-based firm 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 ouster 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. Merrill fell 3.2 percent to $50.34 in German trading as of 10:55 a.m. New York-based spokeswoman Jessica Oppenheim declined to comment when contacted by Bloomberg News.

Citigroup, Bank of America

Citigroup, the biggest U.S. bank, may post about $14 billion of writedowns when it reports fourth-quarter earnings next week, JPMorgan Chase & Co. analysts estimated today. Bank of America Corp. may announce writedowns linked to collateralized debt obligations of about $5 billion, they said.

The world's biggest financial institutions have announced about $100 billion in writedowns 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.

``We are comfortable with our current investment in Merrill,'' said Manish Kejriwal, senior managing director of investments at Temasek.

Sovereign Fund `Concerns'

Soaring investments by sovereign wealth funds such as China Investment Corp. in finance companies may trigger a political backlash in the U.S. and Europe. China Investment, the nation's $200 billion wealth fund, is paying $5 billion for as much as 10 percent of Morgan Stanley.

``Sovereign wealth funds, by definition, are potentially susceptible to non-economic interests,'' New York Senator Charles Schumer said in a statement yesterday. ``The closer they come to exercising control and influence, the greater concerns we have.''

Bernanke said more interest-rate cuts ``may well be necessary,'' addressing concerns that the housing crisis will spread to the wider U.S. economy and trigger a recession. Bernanke said the Fed isn't forecasting a recession.

Goldman Sachs Group Inc. economists predicted this week that the Fed will lower the rate to 2.5 percent by year-end. The bank also joined Merrill and Morgan Stanley in projecting a recession.

Merrill is a passive, minority owner of Bloomberg LP, the parent of Bloomberg News.

To contact the reporter on this story: Joseph Galante in San Francisco at jgalante3@bloomberg.net .

Last Updated: January 11, 2008 04:58 EST
               
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NYE, I heard from a bird, that it maybe adjusted to over 18 Billion. 

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