UPDATE 2-Merrill may write down $5.8 bln in Q2 - analyst Whitney

miércoles 2 de julio de 2008 17:08 CEST

(Recasts, adds details from Oppenheimer note)

By Neha Singh

BANGALORE, July 2 (Reuters) - Merrill Lynch & Co Inc MER.N may incur $5.8 billion of write-downs in the second quarter, said Oppenheimer analyst Meredith Whitney, who also forecast a loss for the world's largest brokerage for the period.

Whitney's estimate is the highest yet among Wall Street analysts, who till date expected write-downs to range from $3.5 billion to $5.4 billion.

Analysts at UBS expect Merrill Lynch to write-down $4.5 billion, Citigroup Inc (C.N: Cotización) $8.7 billion and JPMorgan Chase & Co (JPM.N: Cotización) about $1.4 billion. They also forecast a quarterly and full-year loss at Merrill and Citigroup.

"Further weakening of the macro environment suggests to us that credit costs will continue to head higher, incremental reserve build is likely and credit costs will likely remain at elevated levels throughout 2009," UBS said in a note.


Analysts at Oppenheimer and UBS highlighted concerns that Merrill may need to raise capital, with Whitney saying she expects Merrill to announce some sort of capital-raising plan along with its quarterly earnings report.

"Our best guess is that MER will elect to monetize both BlackRock Inc (BLK.N: Cotización) and Bloomberg prior to the second-quarter earnings release," Whitney said.   Continuación...