Merrill to bounce back soon
(5 August 2008 – USA) Merrill Lynch chief executive John Thain has said that the bank is well capitalised and will soon bounce back into the positive territory, after recent losses associated with the credit crisis.
Since reporting a net loss of US$4.89b in July, Merrill Lynch has launched a series of measures to achieve a return to profits and actively manage its exposure to the struggling US housing market.
Merrill Lynch has cut its exposure to the problematic collateralised debt obligations (CDOs) through a US$30b sale of the securities. Most of the CDOs that remain in Merrill’s coffers date to before 2005 making them relatively less risky than those of a more recent vintage.
In addition, Merrill has tapped into the equity market in late July to raise US$8.55b via a share offering designed to bolster its capital position.
Mr Thain, in an interview with CNBC, said the recent capital raising has provided a big cushion for the bank and that no additional capital will be required if asset values remain steady.
He said, the bank will be returning to profitability shortly.
Merrill Lynch has cut its exposure to the problematic collateralised debt obligations (CDOs) through a US$30b sale of the securities. Most of the CDOs that remain in Merrill’s coffers date to before 2005 making them relatively less risky than those of a more recent vintage.
In addition, Merrill has tapped into the equity market in late July to raise US$8.55b via a share offering designed to bolster its capital position.
Mr Thain, in an interview with CNBC, said the recent capital raising has provided a big cushion for the bank and that no additional capital will be required if asset values remain steady.
He said, the bank will be returning to profitability shortly.
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