Morgan Stanley Prime Brokerage Loses One-Third Of Assets

Sep 29 2008 | 9:06am ET

Morgan Stanley’s prime brokerage lost almost one-third of its assets last week amid fears that the Wall Street giant would face a Lehman Brothers-style collapse.

Several clients have indicated they are likely to return to the fold now that the firm has become a bank holding company regulated by the Federal Reserve, and with a U.S. government bailout of Wall Street imminent. But the loss of hundreds of billions in prime brokerage assets—including about half of its assets in London—may cripple one of Morgan Stanley’s most profitable divisions. Just 10 days ago, only 10% of the firm’s hedge fund clients had pulled their money or announced plans to do so.

Hedge funds are no longer fleeing Morgan Stanley in such great numbers, with the cash outflow slowing to a trickle, the Financial Times reports.

Among the beneficiaries of Morgan Stanley’s woes are Barclays Capital, Citigroup, Credit Suisse, Deutsche Bank, JPMorgan Chase and UBS. Morgan Stanley had pushed executives at other banks not to make a play for its clients as it struggled to survive this month, though competitors said marketing their services did not prove necessary.

“We didn’t have to call them,” one told the FT. “They called us.”


In Depth

Q&A: Brevan Howard’s Charlotte Valeur Talks Strategy

Sep 18 2014 | 11:18am ET

Charlotte Valeur chairs the board of Brevan Howard Credit Catalysts, an LSE listed...

Lifestyle

Hedgies Rock Out For Children's Charity

Sep 15 2014 | 8:40am ET

It's that time of year again—when hedgies trade in their spreadsheets for guitars...

Guest Contributor

Volkered: How Financial Sector Reforms are Creating Opportunities for Hedge Funds

Sep 16 2014 | 11:28am ET

New regulations have dramatically curtailed proprietary trading activity in investment...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

September 2014 Cover

The London Whale: Rogue risk management

Credit default swaps brought down the London Whale and cost JPMorgan $6.2 billion. Here is how it happened.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.