Feb 14 Morgan Stanley expanded its
risk-weighted asset reduction target, a move that will help the
Wall Street bank's capital levels under new rules and
potentially boost shareholder returns.
Morgan Stanley earlier said that it would reduce its fixed
income and commodities risk-weighted assets by 35 percent to
roughly $255 billion by 2014, compared with $390 billion of
those assets at Sept. 30, 2011.
Its new target is more aggressive and further out on the
horizon. Now, the bank said it aims to get those risk-weighted
assets down to $235 billion by 2014, and to bring the level down
to less than $200 billion by 2016.
Having fewer risk-weighted assets frees up a bank's capital,
allowing it to use those funds for business activities or return
it to shareholders rather than having it sitting idle on the
balance sheet. New international capital rules known as Basel
III treat risky assets more stringently than previous rules,
leading several banks to announce reduction targets.
Morgan Stanley Chief Financial Officer Ruth Porat unveiled
the new target in a presentation during a conference call for
fixed-income investors on Thursday.