MercoPress. South Atlantic News Agency

Merrill Lynch posts losses of 6.5 billion in first quarter

Merrill Lynch posted its third straight quarterly loss, its first of 2008, after more write-downs linked to the embattled credit markets. The world's largest brokerage lost 6.5 billion US dollars in write downs on subprime mortgages and other risky assets.

Merrill first-quarter net loss to common shareholders was 2.14 billion US dollar, or 2.19 per share, compared with a profit of 2.11 billion, or 2.26 a share, in the same quarter last year. The company also unveiled plans to cut about 4.000 jobs worldwide. Merrill Lynch had already recorded in excess of 24 billion of write-downs in previous quarters. Chief executive John Thain said that the firm remained "well-capitalized" and that there were no plans to raise more capital. The job cuts make up about 10% of staff, excluding financial advisers and investment associates, "and will save about 800 million a year", Merrill said. Thain said on a conference call with investors on Thursday that the three months ended March 31 were "as difficult a quarter as I've seen in my 30 years on Wall Street." But he also implied that Merrill Lynch may post profits in coming quarters, and told a group of reporters that the month of April was generally better than March. Thain, who took the reins of the world's largest brokerage in November, is trying to turn the company around as it struggles with the aftermath of bad bets on subprime mortgages and repackaged debt. He is increasing the investment bank's business in emerging markets and cutting costs to help offset losses on assets. As part of that cost cutting Merrill said it was cutting head count by 4000 from year-end 2007 levels; about 1100 of the reductions took place in the first quarter. Job cuts will focus on the global markets and investment banking business and support areas, and will not affect retail brokers. At the end of the first quarter, the company had 63,100 employees. The reduced headcount is expected to generate about 800 million US dollars of cost savings a year. The company's book value per share was 25.93 US dollar at the end of the quarter. Merrill Lynch's shares are trading at around 1.8 times their book value, or the accounting value of equity, which is about their historical average. Analysts have blamed poor risk management for Merrill's over-exposure to bad sub-prime mortgage debt. However most of the main US banks have also had to unveil substantial losses linked to sub-prime investments of their own. The knock-on effect has been the global credit squeeze, as banks worldwide have been much less willing or able to lend money until the full extent of sub-prime losses is known. Earlier this week JP Morgan Chase boosted markets, by revealing no major new woes