New Merrill Lynch chief executive John Thain said he saw no need for the US investment bank to raise fresh capital, in an interview with Japan’s Nikkei Shimbun published yesterday.
He also said there were no plans to sell Merrill, which previously got an infusion of US$12.8 billion from a Singapore sovereign wealth fund and elsewhere after sustaining massive losses in the subprime crisis.
“We have plenty of capital going forward and we don’t need to come back into the equity market,” Thain told the paper.
“For 2007, we lost US$8.6 billion after tax, but we raised US$12.8 billion in new capital,” he said. “We raised significantly more capital than we lost.”
Thain replaced Stan O’Neal, who resigned in October after Merrill unveiled massive losses because of its bets on mortgage-related securities, which were hit hard by the subprime credit crisis in the US.
He declined direct comment on speculation that Merrill will report a third straight quarterly loss for the three months ended in March, the Nikkei said, but acknowledged the firm’s portfolio had taken a beating.
“If you look at the prices of credit-related assets, mortgages, leverage loans, commercial real estate — all of those have deteriorated over the last three months,” he said. “We own all of those.”
Despite the eroding value of such assets, Thain said, “I don’t have any plan to sell the company or merge” with another firm.
“We’re doing a better job managing our overall risk, managing the size of our balance sheet,” he said.
Saying Merrill had US$80 billion in cash at the end of last year, Thain indicated that a similar amount has been held through the latest quarter, the Nikkei said.
“The goal is to maintain our current ratings,” Thain said.
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