Merrill Lynch & Co Inc (MER.N) Chief Executive John Thain said Monday if the company loses more money, it may have to raise more capital, leaving the door open to further capital raises if markets deteriorate.
Thain has been widely criticized by investors for repeatedly saying the bank was well capitalized over the last eight months, only to raise more capital. Last week, Merrill sold more than $8.55 billion in common shares to boost its capital after selling $30.6 billion in repackaged debt at a fire-sale price.
In a CNBC interview on Monday, the Merrill CEO said that investors misunderstood his prior comments on capital.
"When we said we weren't going to raise more capital, we said we were adequately capitalized at that point in time," Thain said.
"If we lose more money going forward, we may have to raise more money, and that was always true," he added.
Thain said Merrill should soon return to profitability. The company posted a $4.89 billion quarterly loss last month -- its fourth consecutive quarter of failing to turn a profit.
Thain said he does not want to cut the dividend if the company will be profitable soon. The dividend yield on the company's stock is now about 5.3 percent.
When questioned on CNBC about whether Merrill offloaded risk when it sold the $30.6 billion portfolio of collateralized debt obligations to private equity firm Lone Star, Thain said the deal was a true sale. Lone Star cannot force Merrill to buy back the assets under any circumstances.
Merrill financed 75 percent of the purchase price.
The assets were responsible for 70 percent of Merrill's losses over the last 12 months, Thain said.
Merrill shares closed down 46 cents to $26.39 on the New York Stock Exchange.
(Reporting by Dan Wilchins; editing by Jeffrey Benkoe)
