Losses pile up at key US banks

Merrill Lynch has accepted a takeover bid from Bank of America

US banking giants Merrill Lynch and Citigroup have both reported massive quarterly losses as market turmoil has led to further write-downs.

Merrill, sold to Bank of America in the wake Lehman Brothers' collapse last month, made a loss of $5.15bn (£3bn) in the third quarter.

It was the bank's fifth straight quarterly loss.

Citigroup reported a net loss of $2.8bn as it was forced to absorb $4.4bn in write-downs.

This was Citigroup's fourth consecutive loss.

'Market dislocations'

Merrill Lynch marked down the value of at least $9.5bn worth of assets hit by the credit crunch.

The bank said a large chunk of these write-downs were related to the "severe market dislocations" in September when US mortgage giants Freddie Mac and Fannie Mae were nationalised and Lehman Brothers declared bankruptcy.

Lehman's demise raised questions about Merrill Lynch's finances and shortly after Bank of America agreed to acquire the bank in a shock $50bn deal.

The US government said earlier this week it will spend $250 billion taking stakes in banks, with $25bn expected to go to Citigroup.