$5bn subprime hit makes Merrill unhappy

MERRILL Lynch has become the latest banking heavyweight to succumb to the turmoil in the credit markets, as the US bank said that it would post a surprise third-quarter loss after writing down about $5 billion (£2.45bn) of subprime-related losses.

Merrill said the loss for the quarter would be as much as 50 cents a share after writing down about $4.5bn of loans linked to collaterallised debt obligations (CDOs) and subprime mortgages and about $463 million related to loan commitments to private equity firms.