Merrill Lynch's announcement today that it will take a larger-than-expected $5.5bn (€3.8bn) writedown on sub-prime and leveraged finance securities has led Fitch to give it a negative outlook despite the bank's sharp retrenchment from such securities.

In a statement, Merrill warned of the writedown largely due to big hits in its fixed-income, currency and commodities business, particularly in the value of collateralised debt obligations, sub-prime mortgages and leveraged finance loans.