Morgan Stanley Reaches Settlement with MBIA

  Morgan Stanley Reaches Comprehensive Settlement with MBIA

  * Outstanding CMBS CDS Protection Purchased from MBIA Terminated and Related
    Litigation between the Two Parties Will Be Withdrawn for Consideration of
    a Cash Payment to Morgan Stanley
  * Pre-Tax Loss on the Settlement Will Approximate $1.8 Billion
  * Settlement Will Result in an Approximate 75 Basis Point Increase in Pro
    Forma Tier 1 Common Ratio^1 under Basel III^2

Business Wire

NEW YORK -- December 13, 2011

Morgan Stanley (NYSE: MS) today announces a comprehensive settlement with MBIA
that better positions the Firm for Basel III by resolving outstanding legacy
exposures and releases capital to reinvest in our client-focused businesses.

The comprehensive settlement terminates outstanding credit default swap (CDS)
protection purchased from MBIA on commercial mortgage-backed securities (CMBS)
and resolves pending litigation between the two parties for consideration of a
net cash payment to Morgan Stanley. MBIA will withdraw its residential
mortgage backed securities related suit against Morgan Stanley and Morgan
Stanley will withdraw from suits challenging MBIA’s restructuring. The pre-tax
loss on the settlement will approximate $1.8 billion ($1.2 billion after-tax)
in the current quarter. Importantly, the settlement has the effect of
significantly reducing risk-weighted assets and releasing the equivalent of
approximately $5 billion of capital under the Basel Committee’s proposed Basel
III framework, thereby increasing the pro forma Tier 1 Common ratio under
Basel III by approximately 75 basis points by the end of 2012. Under current
Basel I standards, the Tier 1 Common ratio will be reduced by approximately 30
basis points.

James P. Gorman, President and Chief Executive Officer, said, "It's critical
that we reposition for the new regulatory environment and do so quickly. A top
priority for 2011 was to address this large outstanding legacy exposure and
this settlement is consistent with our efforts to build capital and de-risk
the balance sheet. Putting this behind us removes earnings volatility and
meaningfully improves our pro forma Tier 1 Common ratio under Basel III."

The information above contains forward-looking statements. Readers are
cautioned not to place undue reliance on forward-looking statements, which
speak only as of the date on which they are made and which reflect
management's current estimates, projections, expectations or beliefs and which
are subject to risks and uncertainties that may cause actual results to differ
materially. For a discussion of additional risks and uncertainties that may
affect the future results of the Company, please see "Forward-Looking
Statements" immediately preceding Part I, Item 1, "Competition" and
"Supervision and Regulation" in Part I, Item 1, "Risk Factors" in Part I, Item
1A, "Legal Proceedings" in Part I, Item 3, "Management’s Discussion and
Analysis of Financial Condition and Results of Operations" in Part II, Item 7
and "Quantitative and Qualitative Disclosures about Market Risk" in Part II,
Item 7A of the Company's Annual Report on Form 10-K for the year ended
December 31, 2010 and other items throughout the Form 10-K, the Company’s
Quarterly Reports on Form 10-Q, including “Risk Factors” in Part II, Item 1A
therein, and the Company’s Current Reports on Form 8-K, including any
amendments thereto.

^1 Tier 1 common ratio (Tier 1 common equity divided by Risk-Weighted Assets)
is a non-GAAP financial measure that the Company considers to be a useful
measure that the Company and investors use to assess capital adequacy.

^2 The Basel III estimates are preliminary and may change based on guidelines
for implementation to be issued by the Federal Reserve.

Contact:

Morgan Stanley
Media Relations:
Jeanmarie McFadden, 212-761-2433
or
Investor Relations:
Celeste Mellet Brown, 212-761-3896

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