April 8 (Bloomberg) -- Merrill Lynch & Co. Chief Executive Officer John Thain said the U.S. Federal Reserve's rescue of Bear Stearns Cos. helped avert ``systemic risk'' to the global financial system posed by the credit market meltdown.

The move ``has given the market a great degree of confidence that nothing is going to be systemically damaging,'' Thain said, speaking to reporters in Tokyo today.

Bear Stearns, the fifth-largest U.S. investment bank, became the most prominent victim of the global credit squeeze last month when JPMorgan Chase & Co. agreed to take it over with the Fed's backing. Fed Chairman Ben S. Bernanke said last week that a failure of Bear Stearns could have led to a ``chaotic unwinding'' of investments throughout the U.S. economy.

``The current credit crisis is the most wrenching of the last half century and possibly more,'' Alan Greenspan, the former Fed chairman, told a conference in Tokyo today via satellite from Washington.

Merrill's stock has jumped 15 percent in New York trading since the Bear Stearns rescue was announced March 17, after falling 49 percent in the preceding 12 months. Goldman Sachs Group Inc., the biggest U.S. brokerage, has risen 18 percent after losing 25 percent.

Thain repeated that Merrill, which raised $12.2 billion from investors including Korea Investment Corp. and Mizuho Financial Group Inc., doesn't need additional capital. ``We deliberately raised more capital than we lost last year,'' he said.

Cost Cuts

Merrill has eliminated more than 2,200 jobs, or about 4.5 percent of its workforce, joining Wall Street rivals including Citigroup Inc., Lehman Brothers Holdings Inc. and Morgan Stanley in slashing costs to halt losses.

Thain said he's still reviewing costs, declining to elaborate. Asset writedowns caused Merrill to report a record loss for the fourth quarter.

``In this difficult environment, to focus on expenses is a logical thing for us to do,'' Thain said.

Industrial & Commercial Bank of China Ltd. Chairman Jiang Jianqing said yesterday that ``the U.S. subprime risk isn't over,'' and that he's in no rush to buy assets in the world's largest economy. ICBC has $136 billion of cash and near-cash securities.

Mizuho Alliance

Thain declined to comment on possible alliances with Tokyo- based Mizuho Financial, which said in January it would invest $1.2 billion in Merrill. ``We are not being specific about it at this moment,'' he said.

Merrill said in a Jan. 15 statement it expects collaboration with Mizuho and that the investment provides it with strategic advantages. Mizuho also said in January it would consider an alliance with Merrill in global investment banking.

Merrill will continue to invest in Japan by expanding its investment banking business, including cross-border merger advisory and equity underwriting. The firm will also expand its wealth-management business, through its joint venture with Mitsubishi UFJ Financial Group Inc., Thain said.

Merrill ranked fourth last year in advising on Japanese mergers and acquisitions, above Mitsubishi UFJ and Mizuho, according to data compiled by Bloomberg.

To contact the reporter on this story: Takahiko Hyuga in Tokyo at thyuga@bloomberg.net

Last Updated: April 8, 2008 05:54 EDT