Last night, a Merrill banker told us a massive round of layoffs would begin today and likely persist for another week, as the company reported a steep third-quarter loss and another $9.5 billion of write-downs. As the bank prepares to be swallowed up by Bank of America, here’s how it’s bravely sorting its balance sheet and slashing risk.

Merrill Lynch & Co., which is set to be acquired by Bank of America Corp. in February, posted a wider third-quarter loss amid another $9.5 billion in write-downs of troubled assets.

The company, which already posted some $40 billion in subprime-related write-downs, said it has made "significant progress in balance sheet and risk reduction," having cut 98% of its exposures to U.S. Alt-A mortgages.

Merrill said it cut another 5% of its work force during the quarter and recorded another $39 million in charges for job cuts, primarily in technology, on top of $445 million in charges already recorded in the second quarter.

Chief Executive John Thain -- who will stay on following the merger as president of the combined company's global banking, securities and wealth-management business -- said Merrill is continuing "to reduce exposures and de-leverage the balance sheet prior to the closing of the Bank of America deal."

"As the landscape for financial services firms continues to change and our transition teams make good progress," he added, "we believe even more that the transaction will create an unparalleled global company with pre-eminent scale, earnings power and breadth."

The world's largest brokerage firm by number of brokers reported a net loss of $5.15 billion, or $5.58 a share, compared with a net loss of $2.24 billion, or $2.82 a share, a year earlier.

Merrill recorded negative revenue of $1.17 billion, compared with negative revenue of $1.93 billion, due to the write-downs. Analysts polled by Thomson Reuters were expecting a loss of $5.22 a share on $760 million in revenue.

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