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Sun 30 Dec 2007 09:12 PM

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Formation of Merrill Lynch Saudi Arabia approved

Saudi Arabia approval on Saturday of the formation of Merrill Lynch Saudi Arabia as a joint-stock company with a capital of SR50 million, means that the troubled American financial giant now have an access to the Middle East’s largest stock market.

Merrill Lynch will provide its financial services in the Kingdom with a four-member board of directors appointed by the company’s general assembly for three years. "As an exemption to the law, the founders have appointed its first board of directors for five years," the Ministry of Trade and Industry said in a statement.

Merrill Lynch received in June a banking license from the Saudi stock market’s watchdog Capital Markets Authority (CMA) to operate in the Kingdom.

The license will allow Merrill Lynch to offer its domestic and global clients a full suite of global markets, investment banking products and wealth management solutions, including M&A advisory, structured finance, equity and debt capital market solutions.

India has for the first time become the biggest revenue contributor among Asia's emerging economies for Merrill this year.

Emerging markets are becoming important for Merrill Lynch who is hardly hit by the US sub-prime mortgage crisis.

Analysts in Wall Street estimate that Merrill Lynch could face $10bn of writedowns in the fourth quarter of 2007.

This would cut Merrill’s book value, which was about $40bn at the start of the year, to about $30bn, taking it from a position of having more capital than it needed to being uncomfortably tight.
Merrill, which had total client assets of approximately $1.6 trillion, is in talks with Temasek, the Singapore state investment company, about an injection of up to $5bn.

With this move and penetration to emerging markets, Merrill can recover some of the losses in its US market.

Merrill Lynch is one of the world's leading wealth management. It owns approximately half of BlackRock, one of the world's largest publicly traded investment management companies with more than $1 trillion in assets under management.

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