Merrill Still Quiet on Possible BlackRock Stake Sale

Merrill Lynch still has not informed officials at BlackRock about any final decision on whether it will sell even a chunk of the firm's 49 percent stake in the money management company.


The talks however are ongoing and a final decision could be made late Tuesday or early Wednesday, New York time.

As CNBC reported earlier, Merrill John Thain has faced pressure from rating agencies not to sell the BlackRock stake, and has since sought other assets to sell in order to raise capital, such as real estate or highly rated mortgage debt in addition to merrill's 20 percent stake in financial information firm Bloomberg.

Merrill would seek to drum up capital to help it to cover writedowns and an expected loss for the second quarter that will be announced after the market close on Thursday.

The consensus among senior executives at Merrill is that the writedown for losses in the second quarter will be above $6 billion. One senior executive told CNBC that it would likely total $6.5 billion. That final tally is still subject to change, however, as Merrill continues to look at its exposure to risky debt and how much money it has on hand to cover losses.

Those writedowns stem primarily from holdings in mortgage bonds insured by bond insurers MBIA and Ambac , both of which recently lost their Triple-A ratings, meaning holders of those securities must reflect the declining value of the securities that comes from their lower ratings.

While Merrill’s stakes in Bloomberg and BlackRock are considered two of the largest holdings of the firm, Merrill has smaller stakes in other firms and entities that could produce much-needed capital, say people close to Merrill.