Merrill Lynch will take an estimated US$2.2 billion pre-tax fourth quarter charge (US$1.7 billion after tax), to accommodate 9,000 job cuts.

Workforce reductions of approximately 9,000 are coming through a combination of divestitures, voluntary separation and managed reductions. Approximately US$1.2 billion of the charge is associated with severance costs related to workforce reductions, and other staff-related costs; real estate initiatives, including the consolidation of private client offices in the U.S., Europe, Asia and Australia and the closure or subletting of excess office space in the U.S. accounts for approximately US$500 million of the charge. Approximately US$300 million of the charge is associated with technology initiatives. Other business rationalization costs account for the remaining US$200 million of the charge.

Fourth quarter operating earnings per diluted share are expected to be between US48¢ and US50¢, excluding the charge but including September 11-related expenses. Fourth quarter net revenues are expected to be approximately 8% below the 2001 third quarter, due in particular to lower debt trading revenues and reduced investment banking activity.

The firm expects the restructuring and charges to yield substantial benefits, including annualized expense savings of approximately US$1.4 billion. A substantial amount of these savings is expected to flow through to earnings; a portion will be reinvested in priority growth initiatives.

“Based on a detailed review of all our businesses over the past three months, and our current market outlook, we are moving aggressively to make Merrill Lynch leaner, more competitive, more focused than ever on serving clients in our chosen markets around the world,” said David Komansky, chairman and CEO, and Stan O’Neal, president and COO. “This will position us to be more profitable, and to take maximum advantage of the long-term trends that continue to drive strong growth in financial services globally,” they said.