This is the system you put your faith in
Merrill Lynch has reported $7.9bn (£3.85bn) in write-downs for the third financial quarter of the year leading to its first loss since 2001.
The losses were caused by exposure to bad mortgage-related debt, such as that in the crisis hit US sub-prime sector.
The brokerage giant reported a net loss of $2.3bn from continuing operations, against a $3bn profit a year ago.
The firm is the latest to reveal its exposure to bad debt, with a write-down much larger than initially forecast.
'Difficult markets'
Merrill's admission follows similar warnings from Citigroup, Credit Suisse and UBS as the extent of the crisis in the US sub-prime loans sector becomes known.
This is a bloodbath for certain
Bill Fitzpatrick, Johnson Family Funds
"In light of difficult credit markets and additional analysis by management during our quarter-end closing process, we re-examined our remaining CDO [collateralised debt obligations] positions with more conservative assumptions," said Merrill chief executive Stan O'Neal.
"The result is a larger write-down of these assets than initially anticipated."
Merrill's revenues for the three months until the end of September plummited 94% to $577m from 9.83bn a year earlier.
"This is a bloodbath for certain," said Bill Fitzpatrick, analyst at Johnson Family Funds.
"It speaks very poorly to Merrill's risk management practices."
Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/1/hi/business/7059997.stmPublished: 2007/10/24 12:26:59 GMT
© BBC MMVII
"a long habit of not thinking a thing wrong, gives it a superficial appearance of being right, and raises at first a formidable outcry in defense of custom. But the tumult soon subsides. Time makes more converts than reason."
Read-Only Topic
