Merrill Lynch & Co Inc may get up to $5 billion in a capital infusion from Singapore state investor Temasek Holdings, according to Wall Street Journal.

Temasek is in advanced talks with the largest US brokerage and its board has given preliminary approval for the investment, the Journal added, citing a person familiar with the matter. However, pricing, timing and regulatory issues would still need to be negotiated between the two companies, the report said.

Credit crunch

Meanwhile in Singapore, Temasek spokesman Mark Lee said, “Like we told the Wall Street Journal, we decline 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 third quarter cost Chairman & Chief Executive Officer Stan O’Neal his job, leaving new Merrill leader John Thain with the task of cleaning up. Analysts estimate 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.
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.

China Investment Corp recently agreed to pump $5 billion into Morgan Stanley as the US investment bank posted a fourth-quarter loss. Recently, Citigroup  also agreed to sell a 4.9 per cent stake to Abu Dhabi for $7.5 billion, while UBS  accepted a $9.75 billion investment from the Government of Singapore Investment Corporation (GIC).