Merrill Lynch In Surprise $8.5 Billion Share Offering

08/05/2008 05:12 am ET | Updated May 25, 2011
  • By Ben White, Francesco Guerrera and Henny Sender in New York Financial Times

Merrill Lynch underlined the depth of the credit crisis by taking dramatic action on Monday to bolster its depleted balance sheet, revealing a $8.5bn share offering and $5.7bn in writedowns stemming from the sale of toxic mortgage securities.

The move comes only 10 days after the US investment bank reported a $4.6bn second-quarter loss, including a $9.4bn writedown, and announced asset sales aimed at raising $8bn in much needed capital. Financial stocks rallied in the days following the earlier announcement as investors grew more confident they had seen the worst of the credit crisis. But the latest Merrill writedowns raise new questions about whether banks themselves understand the extent of their problems.

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