8-KEarnings & ResultsOther EventsExhibits & Filings

MORGAN STANLEY 8-K Report, Financial Results (Oct 19, 2011)

Filed October 19, 2011For Securities:MSMS-PKMS-POMS-PQMS-PAMS-PFMS-PIMS-PLMS-PPMS-PEMSTLW

Summary

Morgan Stanley filed an 8-K on October 19, 2011, primarily to disclose its financial results for the quarter ended September 30, 2011, as detailed in an accompanying press release and financial data supplement. The filing also addressed a revision to the company's Risk-Weighted Assets (RWAs) and capital ratios, stemming from updated regulatory guidance received from the Federal Reserve concerning the capital treatment of OTC derivatives collateral. While these revisions impacted previously reported Basel I capital ratios, Morgan Stanley clarified that they do not affect its Basel III capital ratio estimates.

Key Highlights

  • 1Morgan Stanley released its financial results for the quarter ended September 30, 2011.
  • 2The company received updated regulatory guidance from the Federal Reserve regarding the capital treatment of OTC derivatives collateral.
  • 3This guidance led to a revision of Morgan Stanley's Risk-Weighted Assets (RWAs) and associated capital ratios under Basel I.
  • 4Reported RWAs increased for the periods ending December 31, 2010, March 31, 2011, and June 30, 2011, after the revision.
  • 5The revised capital ratios (Tier 1 common, Tier 1, and total capital) under Basel I showed a decrease compared to previously reported figures for the same periods.
  • 6The company filed updated Consolidated Financial Statements for Bank Holding Companies (FR Y-9C) reflecting these revisions.
  • 7Importantly, the revisions to Basel I capital treatment do not impact Morgan Stanley's previously provided estimates for its Tier 1 common ratio under Basel III.

Frequently Asked Questions

The main purpose of this 8-K filing is to disclose Morgan Stanley's financial results for the quarter ended September 30, 2011, and to inform investors about a revision to the company's Risk-Weighted Assets and capital ratios due to updated regulatory guidance from the Federal Reserve concerning Over-The-Counter (OTC) derivatives collateral.

The Federal Reserve's further review led Morgan Stanley to adjust its capital treatment for OTC derivatives collateral. This adjustment resulted in an increase in reported Risk-Weighted Assets (RWAs) for the periods ending December 31, 2010, March 31, 2011, and June 30, 2011, and consequently, a decrease in the reported capital ratios (Tier 1 common ratio, Tier 1 capital ratio, and total capital ratio) under the Basel I framework for those periods.

No, the filing explicitly states that neither the original nor the revised capital treatment for OTC derivatives collateral carries through to Basel III. Therefore, Morgan Stanley's previously provided estimates for its Tier 1 common ratio under Basel III, both currently and projected for the end of 2012, remain unaffected.

The detailed financial results for the quarter ended September 30, 2011, are provided in the press release (Exhibit 99.1) and the Financial Data Supplement (Exhibit 99.2) annexed to this 8-K filing. These documents are incorporated by reference into the report.