September 26, 2008 / 3:36 PM / 10 years ago

UPDATE 1-WaMu may file for bankruptcy shortly: Merrill Lynch

(Recasts, adds details, share movement)

Sept 26 (Reuters) - Washington Mutual (WM.N) may file for bankruptcy shortly, said Merrill Lynch analyst Kenneth Bruce terminating coverage of the stock.

The top U.S. savings and loan bank, whose market value has been virtually wiped out because of soaring mortgage losses, was closed by regulators on Thursday, and its banking assets were sold to JPMorgan Chase & Co (JPM.N) for $1.9 billion. The company witnessed $16.7 billion in deposit outflows from Sept. 15 to Sept. 24, according to an Office of Thrift Supervision statement.

“We suspect the series of ratings downgrades and concerns over the position of U.S. financial institutions, in particular Washington Mutual, led to the deposits outflow,” Bruce said.

Shares of Washington Mutual sank 90 percent to 16 cents in morning trade Thursday. (Reporting by Sweta Singh in Bangalore; Editing by Deepak Kannan)

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