The turmoil in the financial markets continued to cause havoc after it emerged that Merrill Lynch is expected to lose $7 billion.
The losses in the sub-prime sector are expected to be revealed today, the Times reported. Losses were thought to be about $2 billion less than this but are now expected to increase.
Stan O’Neal, the bank’s chief executive, could now lose his job after reassuring employees that the firm’s risk was under control. He has faced continued criticism for making cuts in the bank’s costs and undermining the bank’s ability to manage risk. He has also ousted several high-profile figures from the bank. Arshad Zakaria, Jeffrey Kronthal and Osman Semerci have all faced the chop from the investment bank.
Brad Hintz of Sanford Bernstein & Co. estimated that a cautious approach to risk would cost Merrill $1 billion in annual earnings from next year.