Merrill Lynch said it took a $14.1 billion write-down in the fourth quarter on bad subprime mortgage bets, plus other charges. That wasn’t out of the ballpark, but was more than double the amount of capital the world’s biggest brokerage raised from foreign investors earlier this week. Merrill’s fourth-quarter net loss of $9.8 billion, or $12.01 a share, was the largest in the company’s history. Interestingly, compensation and benefits expenses rose 32 percent to $4.3 billion as it put on more staff.

Korea Investment Corporation said it had first approached Merrill Lynch to propose investment in the U.S. bank, adding the agreed $2 billion share purchase would be financed by Finance Ministry funds. “Because we had made portfolio investments until then, markets hardly expected KIC would make such a strategic investment,” said Park Jong-in, a director of the sovereign fund’s corporate planning & affairs team. “We thought Merrill was able to recover earnings power, once its mortgage-related bonds were cleared up,” Park told Reuters. “We also made a positive judgment on Merrill because of its new, aggressive CEO.” That would be John Thain, pictured above. Will be interesting to see whether the continuing trend of state-backed funds buying U.S banking assets provokes any response from U.S. regulators.

Air France-KLM could provide strategic or financial help in Delta Air Line Inc’s pursuit of a merger with another airline, according to The Wall Street Journal. The Journal said Northwest was more likely to emerge as Delta’s “preferred partner” than United Airlines, which has been talked about as a possible merger candidate, and that Air France-KLM may back up a Northwest bid with cash. Any stake Air France-KLM might take in Delta would be limited by rules capping foreign ownership, but would give the acquisitive European carrier prime real estate in U.S. skies.