Apology: We apologise for removing Tan Kin Lian’s piece on “Business ethics” posted earlier today. It will be published at a later date.

The following are excerpts from various news report on the latest happenings at US investment bank, Merrill Lynch. Singapore‘s state-linked investment firm Temasek Holdings is its largest shareholder.


Temasek agreed in December to invest up to $5 billion for a 10% stake in Merrill Lynch at $48 per share. Since then, more than 50% of the market value of Merrill Lynch has evaporated, to the present level of $25 a share, from more than $55 a share just before the new year.

Temasek was savvy enough to have negotiated protection against equity dilution when it concluded the previous deal: under the terms of the agreement, Merrill Lynch must compensate the Singaporean wealth fund if it raises new capital at a lower price in the future. Still, Temasek is still at risk of booking loss if the share price of Merrill Lynch dives further.


In yesterday’s statement, Merrill said it agreed to sell $30.6 billion of collateralized debt obligations — the mortgage- related bonds that have caused most of the firm’s losses — for $6.7 billion. The buyer is an affiliate of Lone Star Funds, a Dallas-based investment manager.

Merrill has lost almost 55 percent of market value this year. Only Lehman Brothers Holdings Inc. has fallen more on the 11- member Amex Securities Broker/Dealer Index, dropping 77 percent. Merrill fell 12 percent yesterday in New York Stock Exchange composite trading.


Singapore‘s state-linked investment firm Temasek Holdings, the largest shareholder in troubled US investment bank Merrill Lynch, confirmed on Tuesday it was increasing its stake.

Merrill Lynch announced Monday it was dumping billions of dollars of mortgage debt at a steep loss and raising 8.5 billion in new capital, including the 3.4 billion from Temasek.

The announcement came after Merrill on July 17 posted a net loss of 4.89 billion dollars for the second quarter.

Temasek had already committed in December to injecting 4.4 billion dollars, which it could increase by another 600 million dollars, into Merrill Lynch.

That initial investment came with a requirement that if Merrill raised more capital within 12 months at a price lower that the 48 dollars per share that the Singapore fund paid, it would be compensated for the difference.

The Singapore firm is putting that 2.5 billion back into Merrill, along with another 900 million dollars.

Associated Press

The world’s largest brokerage says the sales will trigger a third-quarter write-down of $5.7 billion, but plans to raise $8.5 billion in new capital through a public offering. Temasek Holdings, Singapore‘s sovereign wealth fund, will purchase $3.4 billion of common stock as part of the deal.


Following a session in which the Dow fell 277 points, Merrill Lynch said Monday it will take a $5.7 billion third-quarter write-down on bad debts, and will raise $8.5 billion by selling new stock, a $3.5 billion chunk of which will be bought by the Singaporean state investment firm Temasek. (See “Merrill Moves To Shore Up Books”)

The move shook confidence in the banking sector, rekindling fears that the credit crisis that has gripped the world for the past year has more to run. It followed an announcement earlier in the day from Australia‘s ANZ that it would write down more than $1 billion in credit-related losses.

The Independent

Merrill Lynch, the investment banking giant that has lost more than $40bn (£20.1bn) on its mortgage investments since the start of the credit crisis, shocked Wall Street last night with plans to raise $8.5bn in new shares.

As part of a sweeping financial restructuring, the company is dumping most of its remaining holdings in risky mortgage derivatives and tapping the Singapore government for an emergency $3.4bn cash infusion.

The news of Merrill’s financial restructuring came after a day of mounting rumours it was facing new writedowns, just 11 days after it had posted its last results, containing a bigger-than-expected $9.4bn of writedowns. Its shares sunk 12 per cent to their lowest close in almost 10 years.


Temasek will plough that money, plus another $900 million, back into new Merrill stock, potentially increasing the state-run fund’s stake in one of the best-known U.S. banks to more than 10 percent.

The fund had been facing huge paper losses on its initial investment in Merrill at $48 per share as banking stocks slid this year amid writedowns on risky debt.

The rebate, announced less than two weeks after Merrill posted a $4.9 billion second-quarter loss, effectively reduces the cost of Temasek’s existing shares in the U.S. bank by more than half to $21 a share, according to Reuters calculations.

Neither Merrill nor Temasek disclosed the price at which the new Merrill shares would be offered.

Merrill’s malaise
Financial Times

Witching hour ought to be moved forward from midnight to early evening in New York. These days, the few hours after the market’s official close all too often play host to announcements of profit warnings, bank failures and writedowns. Merrill Lynch added to the Wall Street horror show last night with news of yet another multibillion-dollar writedown and capital-raising effort.

Less than a fortnight ago, Merrill sprang another after-hours surprise on investors in the shape of worse-than-expected quarterly results on the back of, you guessed it, big writedowns. Rumours of more bad news had already pummelled Merrill’s stock throughout yesterday – it closed down almost 12 per cent to hit its lowest level this decade.

When the quarterly results were announced, the hopeful explanation was that John Thain, chief executive since December, was ripping out the kitchen sink with gusto. In saying Merrill will take a third quarter charge of $5.7bn and needs to raise another $8.5bn – about a third of the current market capitalisation – Mr Thain has confirmed that rotten plumbing still needs to come out. Tellingly, Merrill is selling collateralised debt obligations with a gross value of $30.6bn at 22 cents on the dollar. What’s more, Merrill is providing financing for the buyer, Lone Star Funds, for three-quarters of the purchase price – with the funding secured solely aginst the heavily discounted assets that the fund is buying. In effect, the money Lone Star is putting up itself to take the portfolio off Merrill’s books equates to just over 5 cents on the dollar of the gross value.

Mr Thain continues his job of scrubbing Merrill’s toxic balance sheet. He has even managed to persuade Temasek Holdings to come in again on the latest capital-raising, albeit at heavy cost. The problem is, like most horror franchises, the sequels to Merrill’s original chiller appear to be never ending.


Notify of
Inline Feedbacks
View all comments
You May Also Like

居家通知期间还出门买泡泡茶 确诊冠病女子遭提控

一名22岁女子,在履行居家通知期间仍外出买泡泡茶、前往帮友人准备婚礼,较后确诊感染冠病19。因违反居家通知条例,女子被提控上庭。 根据移民与关卡局的文告,名为Nurul Afiqah的本地女子,在3月21日从澳大利亚回返新,她理应遵守居家通知直至4月4日。 然而,她在3月23日却外出往长堤坊买泡泡茶,还到南洋理工学院去。4月2日和3日,还到榜鹅域(Punggol Field)帮忙朋友准备婚礼,现场还有友人的家属。 4月12日,女子因身体不适前往就医,结果确诊。 移民与关卡局谴责女子行为不负责任,居家通知期间还跑去接触友人,漠视风险。 另一男子40岁男子Mohd Noor Salam,也因居家通知期间擅自离开而被提控。他在3月26日从马来西亚返回,原本应履行居家通知至4月10日。但却在3月31日离开兀兰街住处,搭公交前往母亲住家,还到过蔡厝港邻里警局。 4月2日,他离开母亲位于蔡厝港的住家,前往建屋发展局的蔡厝港分行、林邦咖啡店以及林邦购物中心一带。 违反居家通知条例,可在2020年传染病(冠病19居家令)条例下被提控,最高刑罚可达最高罚款一万元、监禁长达六个月,或两者兼施。

遭美国制裁 香港林郑月娥坦承用信用卡不便

美国政府本月初,宣布制裁包括香港特首林郑月娥在内的11名中港官员。据了解,林郑月娥在接受中国媒体访谈时,透露制裁对个人带来不便,包括若使用美国公司的信用卡会被限制。 中国中央电视台的英语频道环球电视网,是询问林郑制裁对生活是否带来影响,林郑则指出, “美国的制裁造成自己个人一点不便,因为我们必须用到一些金融服务,我们不知道这些服务是否会与一家与美国做生意的机构有关,而且使用信用卡会有阻碍。” 不过,她声称这些影响意义不大,而受到北京政府的信任、落实国安法感到光荣,其他官员也会继续现有工作,不会被制裁吓退。他也反指制裁是美国总统川普“试图维护自身利益。” 早前,林郑月娥也退回英国剑桥大学沃尔森学院(Wolfson College Cambridge)的名誉院士(Honorary Fellow)头衔。 剑桥大学沃尔森学院7月初曾发声明,强烈支持保障学院所有成员的人权及言论自由,并关注香港实施《港区国安法》后所发生的事。

PM Lee’s announcement of increase spending on early childhood education benefits PAP’s PCF and NTUC’s First Skool

At the National Day Rally yesterday (18 Aug), Prime Minister Lee Hsien…


冠状病毒19确诊患者曾到访过的地点再增加七处,其中包括女皇道购物中心、客来富街、海军部村庄的职总平价超市等。 根据卫生部昨日(27日)发布的文告,确诊患者曾到访的时间和地点如下: 7月15日下午4点至傍晚6点05分、女皇道购物中心(Queensway Shopping Centre); 7月15日晚上8点25分至9点10分,客来富街(Clive Street)50号的Sri Murugan Vilas餐馆; 7月17日下午1点55分至2点35分,永安路(Yung An Road)550号的Masjid…