NEW YORK (AFP) – US financial services giant Merrill Lynch reported Thursday a 2007 net loss of 7.8 billion dollars amid heavy losses in financial products linked to the mortgage sector crunch.
Credit valuation adjustments of 2.6 billion dollars linked to hedges with financial guarantors on US ABS CDOs (synthetic collateralized debt obligation of asset-backed securities) were recorded in the fourth quarter of 2007, the company added in a statement.
Fourth-quarter 2007 net revenues were negative 8.2 billion dollars, dramatically down from 8.4 billion dollars in the prior-year period.
Merrill Lynch’s fourth quarter 2007 pre-tax loss from continuing operations was 14.9 billion dollars, the company said.
Rising foreclosures resulting from defaults on subprime mortgages — home loans given to people with poor credit histories — has tightened credit sharply since August.