Merrill Could Write Down Up to $15 Billion

Merrill Lynch's subprime-related writedown could be as high as $12 billion to $15 billion when the investment bank reports earnings before the bell Thursday, according to people familiar with the situation.

If that happens, Merrill's collateralized debt obligations (CDOs)/subprime exposures should decline by 50 percent to 70 percent in total with this writedown.

In addition, the company company has already started laying off scores of executives, mostly in its fixed-income business, CNBC has learned.

Newly-appointed chairman and CEO John Thain will hold an analyst call at 8 am ET, followed by a town hall meeting for employees at 10:30 am. CNBC has learned that several Merrill executives will question Thain about the company's situation and where responsibility for the crisis lies. Co-presidents Greg Fleming and Ahmass Fakahany will likely by scrutinized, as will former chief financial officer Jeff Edwards.

Thain will likely make a statement about his new senior management team which includes new CFO Nelson Chai and Margaret Tutwiler, head of global communications and public affairs. In a departure from previous policy, several department heads like Bob McCann, who runs Merrill's brokerage division, will likely report directly to Thain.

Merrill has already quietly laid off scores of executives, which could add up to close to 1,000 so far, according to a source with knowledge of the job cuts.

As CNBC previously reported, total layoffs at Merrill could be up to 1,600.

Merrill Lynch, once the largest underwriter of CDOs in the U.S., on Tuesday said it would raise $6.6 billion from selling preferred shares to an investor group that includes the Kuwait Investment Authority.

That's in addition to the $6.2 billion capital infusion Merrill announced last month in deal with Singapore's Temasek Holdings and U.S.-based Davis Selected Advisers.

Merrill is in somewhat of a dilemma. Thain would like to take a huge writedown, but may not be able to do so because of capital constraints. If Thain were free of these constraints, he'd likely writedown $20 billion. If more capital comes to Merrill, look out for the writedown to grow.

Merrill shares gained almost 4 percent to $55.09 on the New York Stock Exchange Wednesday. It was down slightly in afterhours trading.

-- Reported by Charles Gasparino, Written by