Bear Stearns Cos Inc expects to write down $1.2 billion of assets linked to mortgages in the fourth quarter, resulting in an overall loss, the Wall Street bank's chief financial officer said on Wednesday.
Investors were relieved the write-down was not bigger, and sent Bear Stearns shares up 6.6 percent in pre-market trading.
Bear Stearns has reduced its exposure to subprime mortgage bonds and repackaged mortgage bonds known as collateralized debt obligations, CFO Sam Molinaro said at a Merrill Lynch & Co banking conference.
He said Bear Stearns is now positioned to profit if subprime mortgage bonds weaken further, but still has $884 million of exposure to collateralized debt obligations.
This has been an incredibly challenging period, Molinaro said.
In pre-market trading, Bear Stearns shares rose to $107.57 from $100.87 the day before.
(Reporting by Dan Wilchins, editing by Mark Porter/Gerald E. McCormick)