Temasek, the Singapore state investment company, on Tuesday said that it had invested an additional $600m (€379m) in Merrill Lynch in February, in spite of suffering a paper loss on its earlier $4.4bn investment in the US investment bank late last year.
Temasek had the option to buy the additional 12.5 million shares by the end of March under its initial agreement in December to take a 9.46% stake in Merrill.
The sovereign wealth fund paid $48 for each additional Merrill share, the same price it had paid in December, when it joined the $12.8bn capital infusion for the US investment bank along with Kuwait Investment Authority, Mizuho Financial Group, Korean Investment Fund and Davis Selected Advisors.
Temasek now has paper losses of $540m on its stake in Merrill, whose share price has fallen 11% below the purchase price.
Temasek reveals additional $600m Merrill investment
The Wall Street Journal
Merrill Lynch will on Thursday report $6bn to $8bn in new mortgage-related writedowns, bringing its total since October to more than $30bn and marking its third-straight quarterly net loss, the longest losing streak in its 94-year history.
The Wall Street bank is readying a cost-saving plan that includes job cuts of 10% to 15% in some areas where business is off, such as bond finance, people familiar with the firm say.
Merrill also has reduced its exposure to certain risky mortgage securities to $7.5bn from $40.9bn in June, mostly by writing down their value or paying another party to take on their credit risk.