More Painful 'House-Cleaning' Expected At Top Firm

The Wall Street Journal reports that Merrill Lynch may receive a $5bn cash infusion from Singapore's Temasek Holdings to shore up its capital. And The New York Post reports that David Trone, an analyst at Fox-Pitt Kelton, has said that the Wall Street firm could take an additional $8.4bn asset write-down hit in the fourth quarter, taking the 2007 asset write-down total to a massive $16.5bn. Credit Suisse analyst Susan Roth Kazke also said that she expected write-downs of up to $8bn and that 'we expect more senior management changes, some painful house-cleaning'.

Reuters reports that, despite that $854m fourth-quarter loss, Bear Stearns insists that relations between its board of directors and firm executives are 'very solid and very good'. How very reassuring.

Thomson Financial reports that French bank Credit Agricole has confirmed that it will write-down an additional $2.3bn in assets as a result of the credit crisis. This is in addition to the $784m the bank has already indicated that it will write down. Calyon, the bank's investment banking unit, will post a full-year loss as a result of the write-downs.

Financial News reports that Fortis is to integrate ABN AMRO Asset Management into its own funds business, and has said that fund managers from the two companies 'will have to compete to keep their jobs where overlap exists'. Fortis says that the first announcements affecting staff futures will be made in the next few days, with full integration of the funds taking place before the end of next year.

Financial News also reports that Morgan Stanley analysts are predicting that UBS will need to write-down a further $2.6bn in assets next year (the bank has already written-down almost $14bn). And The Wall Street Journal reports that Swiss activist investor Ethos is calling for a special audit to establish exactly what led to the write downs in the first place. The fund said in a statement that 'in order to clarify the circumstances that drove the bank to this situation, Ethos has asked that a request for information and a request for a special audit be added to the agenda of the extraordinary general meeting of shareholders scheduled to take place in mid-February 2008'.

And finally, in a neat little bit of role-reversal, The Financial Times has reported that some hedge funds are now looking over their exposure to banks as they are concerned about likely defaults! The newspaper quotes Lauren Tiegland-Hunt, a partner at law firm Tiegland-Hunt, who said that some hedge funds found that they have agreed to trading terms that did not require banks to post collateral against certain derivatives trades.

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