Merrill Lynch, the troubled US investment bank, which is expected to be hit by a total credit crunch write-off of $16 billion (£8 billion) this year, is understood to be in advanced talks with the Singapore Government’s Temasek Holdings over a $5 billion (£2.5 billion) injection of capital. Merrill has been one of the world's biggest sub-prime casualties and is expected to write down a further $8 billion (£4 billion) in the fourth quarter, which could take its total mortgage losses this year to $15.9 billion (£8 billion).
It is understood that this morning, the board of Temasek has been given preliminary approval for the investment in Merrill, although price, timing and regulatory issues have yet to be negotiated. Analysts have suggested that if Merrill’s write downs get much worse, it could sell its 20% stake in Bloomberg, the financial information company, or its 49% stake in BlackRock, the US fund manger. Temasek Holdings is one of two Singapore Government investment vehicles and one of the oldest sovereign funds, with an estimated $108 billion (£54 billion) of assets and owns 15.3% of Standard Chartered, the Asian-focused UK bank.
On Wednesday, rival bank Morgan Stanley said it would sell a 9.9% stake to state run China Investment Corp for $5 billion (£2.5 billion) and last month Citigroup, received a $7.5 billion (£3.75 billion) of fresh cash from the Abu Dhabi Investment Authority. (source: Timesonline)