SINGAPORE (AP): U.S. investment bank Merrill Lynch & Co. may get a capital infusion of as much as US$5 billion from Singapore state-owned investment agency Temasek Holdings Pte. Ltd., a newspaper reported Friday. The world's largest brokerage is facing the likelihood of billions of dollars in additional mortgage-related write-downs in the fourth quarter, the Wall Street Journal said. Citing an unnamed source said to be familiar with the situation, the report said Temasek is in advanced talks to inject as much as US$5 billion into the investment firm. Temasek's board has given preliminary approval to the investment in Merrill, the person said, although pricing, timing and regulatory issues remain to be negotiated, the report said. Merrill wrote down US$7.9 billion in the third quarter d
ue to the credit crisis sparked by defaults on housing loan in the U.S. and posted a loss of US$2.3 billion. Analysts have predicted that Merrill's mortgage write-downs may double with another US$8 billion or more in the fourth quarter, the Journal said. A deal with Temasek may not happen yet, the report said, adding that Merrill may be in discussions with other government investment funds besides Temasek. A Merrill spokesman had no immediate comment when contacted by The Associated Press, while calls to Temasek rang unanswered. If the deal goes through, it would join a string of recent investments by sovereign wealth funds into ailing American and European financial companies. Earlier this week, Morgan Stanley, the No. 2 U.S. investment bank, took a US$5 billion infusion from China Investment Corp. after reporting a US$9.4 billion write-down from bad bets on mortgage-related debt. The Chinese government-controlled company will hold no more than 9.9 percent of the bank once the investment converts to common shares in 2010. UBS AG last week announced that the Government of Singapore Investment Corp., the city-state's other state investment fund, is investing US$9.75 billion for a 9 percent stake in the Swiss banking giant. And late last month, Abu Dhabi Investment Authority, the sovereign investment fund of the Gulf Arab state, acquired a 4.9 percent stake in Citigroup Inc., the largest U.S. bank, for US$7.5 billion. (**)
ue to the credit crisis sparked by defaults on housing loan in the U.S. and posted a loss of US$2.3 billion. Analysts have predicted that Merrill's mortgage write-downs may double with another US$8 billion or more in the fourth quarter, the Journal said. A deal with Temasek may not happen yet, the report said, adding that Merrill may be in discussions with other government investment funds besides Temasek. A Merrill spokesman had no immediate comment when contacted by The Associated Press, while calls to Temasek rang unanswered. If the deal goes through, it would join a string of recent investments by sovereign wealth funds into ailing American and European financial companies. Earlier this week, Morgan Stanley, the No. 2 U.S. investment bank, took a US$5 billion infusion from China Investment Corp. after reporting a US$9.4 billion write-down from bad bets on mortgage-related debt. The Chinese government-controlled company will hold no more than 9.9 percent of the bank once the investment converts to common shares in 2010. UBS AG last week announced that the Government of Singapore Investment Corp., the city-state's other state investment fund, is investing US$9.75 billion for a 9 percent stake in the Swiss banking giant. And late last month, Abu Dhabi Investment Authority, the sovereign investment fund of the Gulf Arab state, acquired a 4.9 percent stake in Citigroup Inc., the largest U.S. bank, for US$7.5 billion. (**)
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