Merrill Lynch & Co reported a third-quarter net loss of $7.5 billion on Thursday - worse than analysts had expected - on write-downs and credit losses on complex debt securities.
The brokerage house, which last month accepted a take-over bid from Bank of America Corp, also said it would issue $10 billion of non-voting preferred stock and related warrants to the US Treasury under the government program that gave Bank of America a $25 billion capital injection earlier this month.
In addition, because of the Bank of America deal, Merrill said it was no longer seeking to sell a controlling stake in its Financial Data Services subsidiary. Merrill had said when it announced second-quarter results that it had signed a letter of intent to sell FDS, which provides administrative services to the company's mutual funds and retail banking businesses.
The bank did receive a pretax gain of $4.3 billion from the sale of its 20 percent stake in Bloomberg, the media and data company, which had also been announced with its second-quarter results. Merrill said its third-quarter net loss applicable to common shareholders widened to $5.58 per share from $2.82 per share, or $2.3 billion, a year earlier. The company posted a loss of $5.56 per share from continuing operations. Analysts' average forecast was a loss of $5.18 per share, according to Reuters Estimates.