US investment bank Merrill Lynch reported a year-end loss of $7.8 billion (€5.3 billion), its first annual loss since 1989, after it wrote down about $16 billion in mortgage-related debts during the final quarter of 2007.

The bank reported a fourth-quarter net loss of $9.8 billion, the largest quarterly loss in its history, eclipsing Merrill's $2.3 billion loss in the previous quarter.

Merrill Lynch, along with Citigroup and Bear Stearns, has become one of the Wall Street firms worst hit by the global credit crunch. The bank has been forced to raise $12.8 billion from foreign investors, including state-controlled sovereign funds in Singapore, Korea and Kuwait.

The bank has lost almost 50 per cent of its value in the last year, cutting almost $42 billion from Merrill Lynch's peak market capitalisation of $84.7 billion in late January 2007.

Merrill's recently-appointed chief executive John Thain whose predecessor Stan O'Neal lost his job over the losses in the US home loan crisis, said the results were "unacceptable" and that the bank should stop taking risks that have the potential to wipe out profits.

He criticised the bank's culture of departmental "silos" with little interaction, and promised a radical improvement in risk management.

Davy said in a research note said that Irish banks were trading 43 per cent off their highs of last year, making this the second-worst bear market of the past 30 years after the 1999-2000 market which led to a decline of 46 per cent and lasted 13 months.

Irish financial stocks had a mixed day yesterday. Anglo Irish Bank closed down 0.3 per cent at €9.12, while Bank of Ireland fell 1 per cent to €9.33. Irish Life & Permanent closed up 3 per cent at €10.20, while AIB ended the day up 1.4 per cent at €14.90.