Just What Has Morgan Stanley Got To Do ?

Morgan Stanley HQ

A little respect is in order.

Bloomberg reports that regulators and investors have touted higher capital ratios as the path for banks to restore confidence. Morgan Stanley, the best-capitalized Wall Street firm, is proving that’s not enough.

Morgan Stanley has the highest Tier 1 common ratio among the five largest U.S. investment banks, topping JPMorgan Chase, Bank of America, Citigroup and Goldman Sachs. Still, it faces the largest potential downgrade from Moody’s Investors Service, has the highest-priced credit-default swaps and trades at the biggest discount to liquidation value.

In the meantime, CNBC has reported that, according to its sources, Morgan Stanley, worried about the potential impact of new regulations, is considering selling a minority stake in its commodities business, and has held preliminary conversations with potential suitors in recent months about how a deal could look.

Given the confidentiality of the talks that have occurred, the terms of a potential deal aren’t clear. People with intimate knowledge of the business say that Morgan’s commodities unit has historically generated $2bn to $3bn in annual revenue, meaning that, depending on the premium, the entire unit could be worth considerably more.

Finally, The Wall Street Journal has reported that Morgan Stanley is thought to be planning to reopen its fixed income trading desk in Toronto, which was closed down over a decade ago. The firm is said to want to tap into global demand from investors for Canadian debt.

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