Doubts on Merrill’s prospects of selling its bad loans

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The Korean firm's chief executive said he was potentially in the market for a large slice of the Merrill loans but not at any price.

"We have yet to reach an agreement because of differences in assessing the value of assets," Lee Chol Hwi said in Seoul. "We have been seeking to buy a significant amount, but a deal may be difficult at this rate."

Merrill chief executive John Thain, who took over at the helm in December, has been selling off assets and subprime-linked investments to shore up his balance sheet after taking more than $50 billion (£28.05 billion) of credit market losses.

The Koreans have emerged as important players in potentially providing capital for ailing Wall Street firms.

Embattled Lehman Brothers is in talks with Korean Development Bank about a possible sale of 25% of the US firm. While other lenders, including HSBC and Japan's Mitsubishi, have been mentioned as possible buyers of Lehman, both have denied they are interested.

Lee's KAM is also in talks with Lehman Brothers over buying some non- performing loans.

Korea Asset Management specialises in cleaning up delinquent loans, and has a 1 trillion won (£488.6 million) fund with local partners to buy bad debts in the US. The firm made its first overseas investment in December last year, leading a group of South Korean companies in buying 133.4 billion won worth of bad debts in China.