Morgan Stanley Cuts Net Exposure to Five European Nations

Morgan Stanley (MS), owner of the world’s largest brokerage, said its net exposure to five of Europe’s most-indebted nations was $2.41 billion, down from $3.06 billion in January.

Morgan Stanley’s net exposure to the five countries -- Greece, Ireland, Italy, Portugal and Spain -- was $4.01 billion before hedges, according to figures posted yesterday on the New York-based bank’s website. Net exposure to France rose to $4.14 billion from $1.71 billion as of Dec. 31.

Concern that Europe’s debt crisis would spark bank losses contributed to a 41 percent tumble for Morgan Stanley’s shares in the third quarter of last year. The firm said in October that its net exposure to the five was $3 billion, helping halt the decline of the shares.

Spain accounted for the majority of the net exposure to the so-called GIIPS nations, with $1.32 billion. That included $833 million in unfunded commitments, and a negative $493 million in net inventory. The firm had a net short position of $137 million on Portugal. A short position is a wager the price of a security will fall.

Morgan Stanley had $6.44 billion of net exposure to the five countries, including $4.9 billion to Italy, as of Dec. 31. After it restructured a derivative with the Italian government, which settled on Jan. 3, those amounts dropped to $3.06 billion and $1.52 billion, respectively.

Photographer: Daniel Acker/Bloomberg

Pedestrians walk by the Morgan Stanley headquarters in New York. Close

Pedestrians walk by the Morgan Stanley headquarters in New York.

Close
Open
Photographer: Daniel Acker/Bloomberg

Pedestrians walk by the Morgan Stanley headquarters in New York.

To contact the reporter on this story: Michael J. Moore in New York at mmoore55@bloomberg.net

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.