Merrill Lynch on Monday underlined the depth of the credit crisis by taking dramatic action to bolster its depleted balance sheet, revealing an $8.5bn (£4.3bn) share offering and $5.7bn in writedowns linked to the sale of toxic mortgage securities.

The move comes only 10 days after the US investment bank reported a $4.6bn second-quarter loss, including a $9.4bn write-down, and announced asset sales aimed at raising $8bn in much needed capital. It has been forced to raise more than $26bn from outside investors, including the latest share offering.