Subprime mortgage anxiety continued to spread on Thursday as a leading derivatives index hit a new low and fears grew that Merrill Lynch and other banks could be forced into even bigger asset writedowns. Those fears drove Merrill Lynch shares down 4 per cent to $60.90 as analysts suggested the bank might need to take writedowns beyond the $8.4bn announced on Wednesday.
The writedown, which was $3.5bn more than Merrill had estimated, has led to questions about the bank’s risk management and the future of Stan O’Neal, chief executive. Risk management officers have been disappearing from the business lately, with some like HSBC’s David Gibbons leaving suddenly. Before joining HSBC Gibbons was with HSBC’s regulator, the Office of the Comptroller of the Currency.
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