Merrill Lynch has reported its first loss in six years as a publicly traded company after writing down $7.9 billion for bad bets on risky subprime mortgages and related securities.
Merrill Lynch's third-quarter net loss was $2.3 billion from continuing operations in the third quarter, compared with a profit of $3 billion a year earlier.
More write-downs could be coming if the world's largest brokerage further cuts the value on its remaining $20.9 billion exposure to collateralized loan obligations and subprime mortgages.
Chairman and Chief Executive Stan O'Neal said the company is still working to resolve the impact of loans to people with weak credit.
Merrill's write-downs - before hedges - were bigger than the combined $3.6 billion in write-downs and charges recorded by rivals Goldman Sachs Group, Bear Stearns, Morgan Stanley and Lehman Brothers Holdings.
The $7.9 billion of write-downs was more than the $5.5 billion Merrill forecast earlier this month. After re-examining its positions on collateralized debt obligations, it used more conservative assumptions for valuing those assets.
Merrill said the net write-down figure does not include a $967m write-down, before fees, on commitments that include loans for takeovers.
