Its net banking product GNP is 23 to 16

At them two, Citi and Merrill Lynch have accumulated nearly 125 billion dollars in losses and write-downs of assets since the beginning of the crisis of the "subprime". This represents about one-fifth of the total losses and impairments of assets recorded by the financial institutions at the global level ($650 billion). The third quarter was not easier than the previous ones, the figures published yesterday show that they have continued to strain their balance while their revenues continued to decrease. The contrast is severe with banks such as JPMorgan Chase and Wells Fargo, which for their part announced recipients results two days ago.

New write-downs

Citi and saved $ 2.8 billion of net loss over the past three months, resulting in large part of new impairment of assets in the amount of $ 13.2 billion. It is the fourth quarterly loss in a row for the institution. Its net banking product (GNP) is 23, to $ 16.7 billion, from the third quarter of 2007. If the activity of retail banking is an increase of 2, those of the Bank for investment and wealth management are receding.

The situation is still difficult for Citi, which has been, at the end of September, becoming the first Bank of deposit us with Wachovia making win its prey by Wells Fargo, which brought $ 15 billion on the table. The Bank has committed, before the summer, a reduction of assets program (it was $ 400 billion) and declining enrolment (23,000 posts have been deleted since the beginning of the year). But this does not resolve the problem of the losses on loans and real estate products. Commercial Bank, with a very strong activity in the area of credit cards, Citi may suffer more than other institutions of the economic slowdown in the United States.

Merrill Lynch continues on the other hand to beat records with the announcement of a new loss of $ 5.15 billion, the fifth in a row and double that announced at the same time in 2007 (2.24 billion). His income was only $ 16 million, instead of 380 million a year earlier, due to a pile of reserves, losses and exceptional elements without which it would have been 5.7 billion. Always dangerous, "fixed income" activity has posted a negative 9,94 billion income while activities related to the stock market have doubled their incomes, to 6 billion.

At this rate, the price paid by the shareholders of Bank of America to acquire the first broker in the world in February will be really expensive, even if the transaction, valued at $ 50 billion, payable in shares. Last quarter, Merrill Lynch to pay $ 2.5 billion to its Singapore Temasek investor, who had seen the value of its investment to collapse.

In extremis, in the apocalyptic weekend of 13 and 14 September that led to the bankruptcy of Lehman Brothers, John Thain, Merrill Lynch boss, reached to sell the Centennial Bank of America financial institution, while it was engaged in discussions to resume Lehman. He said yesterday that he continued "to reduce the risk on their balance sheet and reduce its leverage effect" prior to the signing of the transaction. The Bank carried out a few outstanding actions last quarter, as the sale of its stake in Bloomberg for $ 4.3 billion and the transfer of a portfolio of securitized real estate products, with a face value of 30.6 billion to only 6.7 billion.

Like Citi and seven other major banks, Merrill Lynch will be recapitalised to the tune of $ 25 billion by the Government. This action of public authorities "solves the basic problem of financial institutions." "You will see the credit conditions improve," assured John Thain yesterday.