Having bet the farm already, we knew that Temasek will not abandon their investment in Merrill Lynch.
So I guess we can’t be that surprised that Temasek will buy another $3.4 billion in the company. That is even after Merrill took another $5.7 billion in write-downs. Due to the losses, Merrill announced plans to raise at least $8.5 billion by selling new common shares. Of which Temasek will buy $3.4 billion.
Having invested so much in Merrill, I can understand why Temasek is going in further into the mess. However if Temasek are going in with so much of Singapore’s money, I suggest that take a more hands-on approach in the running of Merrill. Merrill has taken billions of dollars in write-downs in the past few quarters and had sold key holdings to cover those losses.
Merrill may be the No. 3 investment bank on Wall Street, but the problems there had been so bad that they had sold off a 20 percent stake in Bloomberg. You have to wonder just how bad things are there when there had been almost no good news for quite a while now. No matter how big the company is, you cannot have write-downs after write-downs, quarter after quarters.
So if Temasek want to invest more of Singapore’s money in Merrill, go right ahead. But after putting in some much money, Temasek need to put some oversight on the company. These sorts of losses just cannot continue.