New York – Singapore – The Wall Street Journal on Thursday reported that Singapore's state-owned investment company Temasek Holdings may put in up to 5 billion US dollars of capital into Merrill Lynch & Co as the financial institution braces for additional heavy subprime-related writedowns in the 4 Q.

The Journal reported that Temasek is in advanced talks with the largest U.S. brokerage and its board has given preliminary approval for the investment. However, pricing, timing and regulatory issues would still need to be negotiated between the two companies.

Temasek declined to comment when asked about the potential investment. In Singapore, Temasek spokesman Mark Lee said: "Like we told the Wall Street Journal, we decline comment." Merrill spokeswoman could not be immediately reached for comment.

Merrill Lynch faces huge potential write-downs on assets underpinned by risky subprime mortgages. The company's $8.4 billion write-down in the 3 Q cost Chairman and Chief Executive Stan O'Neal his job, leaving new Merrill leader John Thain with the task of cleaning up.

A Temasek capital infusion into Merrill would be the latest in a series by sovereign wealth funds into western banks hurt by this year's credit crunch.

According to Analysts, Merrill could further slash the value of these subprime-related assets by an additional several billion dollars. Last month, the company said its total exposure to subprime mortgages and collateralized debt obligations was $27.2 billion.
Earlier this week, China Investment Corp agreed to pump $5 billion into Morgan Stanley as the U.S. investment bank posted a fourth-quarter loss fuelled by $9.4 billion of losses in subprime mortgages and other assets.

Citigroup Inc agreed last month to sell a 4.9 percent stake to Abu Dhabi for $7.5 billion, while UBS accepted a $9.75 billion investment from the Government of Singapore Investment Corporation (GIC).