WASHINGTON, Dec 25: US investment bank and brokerage Merrill Lynch said on Monday it had raised a potential $6.2 billion, mostly from a Singapore state-owned investment fund that will buy $4.4 billion stake in the troubled bank.

Merrill, which has seen its finances ravaged by a persistent US housing slump, said Singapore’s Temasek Holdings Pte. Ltd., had committed to $4.4 billion shareholding which it may raise by an additional $600 million.

The US bank’s new chief executive officer, John Thain, said the cash injections would help Merrill shore up its stressed balance sheet.

Merrill also announced that Davis Selected Advisors, a US investment firm, was purchasing a 1.2-billion-dollar stake in the bank.

“One of my first priorities at Merrill Lynch was to strengthen the firm’s balance sheet, and today we have made great progress towards that by bolstering our capital position through these investments,” Thain said.

Merrill ousted its former CEO Stan O’Neal in late October after revealing nearly eight billion dollars in write-offs, mainly related to ailing mortgage investments.

“John Thain, the former CEO of NYSE Euronext, stepped in to right the ship and he has wasted little time in strengthening the firm’s balance sheet,” Patrick O’Hare, a market analyst at Briefing.com, said of Merrill’s news.

Analysts expect the bank to unveil fresh losses when it releases its fourth quarter earnings.

Merrill said Temasek’s stake would remain under 10 per cent and that both the Singapore fund and Davis Selected Advisors would have no control over the bank’s management or operations.

Thain said the Temasek deal would enable the bank to boost its business in Singapore, China and India.

The deal is the latest in which a cash-rich foreign state-controlled fund has bought a big shareholding in a US bank troubled by vast mortgage-related losses.

Morgan Stanley announced last Wednesday that the Beijing-controlled China Investment Corporation (CIC) had obtained a five-billion-dollar stake in the firm.

That deal enables CIC to gain up to a 9.9 per cent shareholding in Morgan Stanley.

Both Morgan Stanley and Citigroup, like Merrill, have seen their finances stretched by mortgage investment losses tied to the sharp downturn in the US property market.

CIC grabbed a three-billion-dollar stake in the Blackstone Group, a large private equity firm, earlier this year and China’s CITIC Securities Co. Ltd. bought a six per cent shareholding in Bear Stearns, another troubled US investment house, for one billion dollars in October.

Foreign government-controlled funds now own sizeable chunks in four of America’s biggest banks.

Some US lawmakers have voiced concerns about the deals on national security grounds, but none of the deals have so far been blocked by American regulators.

Thain appears to be moving rapidly to restore Merrill’s financial health.

The bank also announced on Monday that it had agreed to sell most of its mid-market commercial finance business, Merrill Lynch Capital, to the GE conglomerate.

Merrill, which is battling to shore up its finances after suffering multibillion losses on ailing mortgage investments, and GE did not reveal the financial terms of the deal.—AFP