Merrill Lynch is expected to report write-downs of $15 billion stemming from soured mortgage investments, coming in at nearly double the original estimate. The losses are expected to be disclosed when Merrill reports earnings next week. Wall Street expects Merrill to report losses of $10 billion to $12 billion. In related news, Charlie Gasparino reported on CNBC that sources inside the firm have told him the Citigroup write-downs could be $24 billion when earnings are announced next Tuesday.
These write-downs are prompting both firms to raise additional capital from outside investors. Citigroup could get as much as $10 billion from foreign governments, and Merrill is expected to receive $3-4 billion, with much of the cash coming from a Middle Eastern government investment fund. Citi is also expected to consider slashing its dividend in half in a move that would save it around $2.5 billion a year. Both firms are rushing to finalize the deals before they report earnings.
http://www.marketwatch.com/merrill-lynch-reportedly-facing-massive/
http://www.marketwatch.com/citigroup-merrill-reportedly-seek-fresh/
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Apparently Citi intends to announce job cuts of between 17,000 and 24,000 as well.
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