Wall Street Giants: One Feels Pain, Other Sees Gain

Jul 21 2006 | 5:43pm ET

Alternative investments buoyed one Wall Street giant in the second quarter, while another was burned in the sinking market.

Citigroup's profits from alternative investments fell by a third in the second quarter to $257 million from $385 million in the same quarter last year, as revenues from alternatives plummeted by nearly half. Second-quarter revenues dropped from $1.1 billion to $584 million. Citigroup blamed poor returns in its private equity and securities portfolios, though it said those losses were partly offset by high client revenues. Overall, Citigroup posted 4% increase in second-quarter income.

Merrill Lynch, meanwhile, saw its bottom-line boosted by stellar proprietary stock trading performance, even as hedge funds around the world suffered widespread losses. Proprietary trading revenue soared 84% for the quarter, as Merrill saw net earnings jump 44% to $1.6 billion on revenues of $8.2 billion. Meanwhile, BlackRock, which is buying Merrill Lynch Investment Managers, said hedge fund redemptions totaled $132 billion in the second quarter, though, overall, the firm's alternative assets under management rose $247 billion.


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