Temasek Holdings, the Singapore state investment company, said on Tuesday that it had invested an additional $600m in Merrill Lynch in February, in spite of suffering a paper loss on its earlier $4.4bn investment in the US investment bank late last year.

The Government of Singapore Investment Corp, the city state’s biggest sovereign wealth fund, is considering entering a new capitalisation programme for UBS after investing almost $10bn in the Swiss bank in January. GIC also has posted paper losses on its investment.

Temasek and GIC have been criticised by analysts for making what appeared to be premature investments in several big western financial institutions at the height of the global credit crunch.

Temasek had the option to buy the additional 12.5m shares by the end of March under its initial agreement in December to take a 9.46 stake in Merrill.

Temasek paid $48 for each additional Merrill share, the same price it had paid in December, when it joined the $12.8bn capital infusion for Merrill along with Kuwait Investment Authority, Mizuho Financial Group, Korean Investment Fund and Davis Selected Advisors.

Temasek now has paper losses of $540m on its stake in Merrill, whose share price has fallen 11 per cent below the purchase price. The additional investment in Merrill was made shortly before Temasek closed its financial books for the year on March 31. Prior to that, Temasek sold stakes in an Indonesian bank and a Singapore power plant for a total of $4.1bn, which would outweigh the paper losses of almost $1.3bn on its investments in Merrill and Barclays last year.

Temasek paid $2bn in July for a 1.8 per cent stake in Barclays, whose share price has since fallen 38 per cent.

Temasek’s other investments in financial institutions have performed well, with the share prices of Bank of China, China Construction Bank and Standard Chartered rising above what Temasek paid for the stakes.