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Oct 7 (Reuters) - Wachovia Capital Markets widened its third-quarter and full-year loss estimates for Merrill Lynch & Co Inc MER.N on expected losses in the investment bank’s fixed income, currencies and commodities (FICC) segment and further writedowns.
“Losses in FICC should overwhelm decent results in underwriting, all things considered, and the $4 billion gain from the sale of Merrill’s Bloomberg stake,” analyst Douglas Sipkin wrote in a note to clients.
Sipkin expects Merrill to report a loss of $6.12 a share in the third quarter, compared with his prior view of a loss of $1.03 a share. For the full year, he sees a loss of $12.50 per share, compared with his previous forecast of a loss of $8.14 per share.
Merrill Lynch’s global wealth management unit should begin to see signs of weakness as retail investors disengage due to bear market conditions and client assets decrease in light of market performance, the analyst said.
He forecast a 7 percent sequential revenue decline in the investment bank’s private client business. Shares of Merrill were trading at $22.95 before the bell. They closed at $24.20 Monday on the New York Stock Exchange. (Reporting by Amiteshwar Singh in Bangalore; Editing by Deepak Kannan)