April 3 (Bloomberg) -- Merrill Lynch & Co. Chief Executive Officer John Thain said the world's biggest brokerage doesn't need more funds from outside investors, after speculation that the company needed capital sent the shares down almost 15 percent this year.

Thain, 52, told Japan's Nikkei news service that New York- based Merrill has ``plenty of capital.'' His comments were confirmed by company spokeswoman Jessica Oppenheim.

Merrill shares have fallen almost 15 percent this year, partly on speculation that writedowns on mortgage-related securities and junk-grade loans might force the firm to seek more capital. Merrill raised more than $12 billion from investors, including Korea Investment Corp. and Singapore's Temasek Holdings, in the month leading up to its Jan. 17 announcement of a record fourth-quarter loss of $9.8 billion.

The shares gained 55 cents, or 1.2 percent, to $45.89 at 4 p.m. in New York Stock Exchange composite trading, after rising as high as $47.22 following Thain's remarks.

The world's biggest banks and securities firms have raised $136 billion from government and private sources to replenish capital after losses tied to mortgage assets. Writedowns and credit losses following the collapse of the U.S. subprime mortgage market have exceeded $232 billion, according to data compiled by Bloomberg.

Issuing new equity to raise capital dilutes the earnings of existing stockholders.

Less Cushion

Yesterday, Goldman Sachs Group Inc. analyst William Tanona said in a report that Merrill ``likely'' will have to raise additional capital in coming months ``via equity offerings, asset sales and/or dividend cuts'' if his forecast of about $5 billion of first-quarter writedowns proves correct.

More writedowns ``could chew another hole into the balance sheet, but it is not immediately clear that Merrill would need to raise additional capital,'' Lehman Brothers Holdings Inc. analyst Roger Freeman wrote today in a report. In any case, ``the firm will have less of a cushion going forward.''

Thain, who took over as CEO in December following the ouster of Stan O'Neal, said in a Jan. 17 conference call with analysts that the firm had raised enough capital to cover losses in 2008.

``We were very deliberate in raising more capital than we lost'' in 2008, Thain said then.

In a report today, Credit Suisse analyst Susan Roth Katzke wrote that Merrill was so confident about its capital that it was ``taking advantage of liquidations of collateral'' and buying assets.

``The environment would have to get dramatically worse for Merrill to have to come back to the equity markets for additional capital,'' Katzke wrote, citing an interview with Chief Financial Officer Nelson Chai.

Merrill, the third-biggest U.S. securities firm by market value, owns a passive 20 percent stake in Bloomberg LP, the parent of Bloomberg News.

To contact the reporter on this story: Zhao Yidi in New York at yzhao7@bloomberg.net; Bradley Keoun in New York at bkeoun@bloomberg.net.

Last Updated: April 3, 2008 17:02 EDT