UPDATE 2-Merrill may need more capital, post Q2 loss - Lehman

viernes 13 de junio de 2008 17:45 CEST

(Adds analyst comments, background and updates share price)

By Tenzin Pema

BANGALORE, June 13 (Reuters) - Merrill Lynch & Co MER.N appears increasingly likely to raise additional capital, said an analyst at Lehman Brothers Inc, who also expects the world's largest brokerage to post its fourth straight quarterly loss.

"More important, management appears open to the idea of selling stakes in Bloomberg and/or BlackRock, having previously resisted the idea," analyst Roger Freeman wrote in a research note.

Earlier this week, Merrill Chief Executive John Thain said on a conference call that the brokerage would consider selling its stakes in news and financial data company Bloomberg and money manager BlackRock Inc (BLK.N: Cotización) if it needed more capital.

Thain also said Merrill is "well capitalized," but added that the company had last year considered selling its stakes in BlackRock, worth roughly $13 billion, and Bloomberg, worth about $5 billion to $6 billion.

"Given the extent to which Merrill shares have fallen since the prior two capital raises, issuing equity has become a very expensive proposition," Freeman wrote. "Consequently, asset sales may be more palatable."

Merrill in December and January raised more than $12 billion from outside investors, including sovereign funds like Singapore's Temasek Holdings [TEM.UL] and the Kuwait Investment Authority.

These capital raises came as Merrill, which is one of Wall Street's largest investment banks, recorded more than $30 billion in writedowns since its third quarter. Merrill's shares have fallen by about a third this year.   Continuación...