Morgan Stanley Lifts Risk-Weighted Asset Reduction Target

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.

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.