Vale, the world’s second-largest mining group, has fired Merrill Lynch as one of its two lead advisers after the investment bank decided not to help finance a potential $90bn takeover bid for Xstrata, the Anglo-Swiss miner.

Merrill was told by Vale that it would lose its advisory role in the takeover if it did not commit a large part of its balance sheet to finance the transaction, according to people close to the situation. However, the bank concluded that the terms of the financing were not economically feasible for either its own or Vale’s shareholders.