1st October 2011, 06:23 PM
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Sachin Asher
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Join Date: Sep 2006
Location: Vadodara
Posts: 8,636
Rep Power: 383
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Morgan Stanley
Morgan Stanley's common stock lost 10% on Friday.
Prices of Morgan Stanley's credit default swaps have shot up and investors are now getting jittery about the investment bank's
- exposure to European debt,
- excessive reliance on short-term borrowing
- dependence on trading revenues.
As of now, it seems that investors are over-reacting, but 2008 crisis has shown that things can change very fast in the financial markets.
Quote:
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Investors are now paying $449,000 a year to insure $10 million of Morgan Stanley bonds against a possible default in a sparsely traded market in what are called credit-default swaps. That is almost three times the cost in early June, but it is still well below the roughly $1.3 million a year it cost to insure Morgan Stanley bonds a few weeks after the collapse of Lehman Brothers, according to pricing from Markit.
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Morgan Stanley risky as Italian banks? Will it be able to weather another financial storm? - The Economic Times
Quote:
Morgan Stanley's reliance on the debt markets, instead of depositors, to provide funding for its assets may be one cause of concern, some analysts said. Morgan Stanley and Goldman Sachs, which were the second-biggest and biggest U.S. securities firms before converting to banks, both got less than 10 percent of their funding from depositors as of June 30, according to company filings with the SEC.
By contrast, Bank of America and JPMorgan Chase & Co., the two largest U.S. banks by assets, funded more than half of their balance sheets with retail deposits at the end of June, filings show.
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Morgan Stanley Seen Risky as Italian Banks in Swaps Market - BusinessWeek |
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