Morgan Stanley 2009 Annual Report Download - page 194

MORGAN STANLEY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The table below sets forth the Company’s significant U.S. bank operating subsidiaries’ capital as of
December 31, 2009.
At December 31, 2009 Amount Ratio
(dollars in millions)
Total Capital (to RWAs):
Morgan Stanley Bank, N.A. ................................................. $8,880 18.4%
Morgan Stanley Trust ...................................................... $ 591 69.8%
Tier I Capital (to RWAs):
Morgan Stanley Bank, N.A. ................................................. $7,360 15.3%
Morgan Stanley Trust ...................................................... $ 591 69.8%
Leverage Ratio:
Morgan Stanley Bank, N.A. ................................................. $7,360 10.7%
Morgan Stanley Trust ...................................................... $ 591 8.8%
Under regulatory capital requirements adopted by the U.S. federal banking agencies, U.S. depository institutions,
in order to be considered well-capitalized, must maintain a capital ratio of Tier 1 capital to RWAs of 6%, a ratio
of total capital to RWAs of 10%, and a ratio of Tier 1 capital to average book assets (leverage ratio) of
5%. Each U.S. depository institution subsidiary of the Company must be well-capitalized in order for the
Company to continue to qualify as a financial holding company and to continue to engage in the broadest range
of financial activities permitted to financial holding companies. As of December 31, 2009, the Company’s three
U.S. depository institutions maintained capital at levels in excess of the universally mandated well-capitalized
levels. These subsidiary depository institutions maintain capital at levels sufficiently in excess of the “well-
capitalized” requirements to address any additional capital needs and requirements identified by the federal
banking regulators.
MS&Co. and Other Broker-Dealers. MS&Co. is a registered broker-dealer and registered futures commission
merchant and, accordingly, is subject to the minimum net capital requirements of the SEC, the Financial Industry
Regulatory Authority and the Commodity Futures Trading Commission. MS&Co. has consistently operated with
capital in excess of its regulatory capital requirements. MS&Co.’s net capital totaled $7,854 million and $9,216
million as of December 31, 2009 and December 31, 2008, respectively, which exceeded the amount required by
$6,758 million and $8,366 million, respectively. Morgan Stanley Smith Barney LLC is a registered broker-dealer
and registered futures commission merchant, introducing business to MS&Co. and Citi, and has operated with
capital in excess of its regulatory capital requirements. MSIP, a London-based broker-dealer subsidiary, is
subject to the capital requirements of the Financial Services Authority, and MSJS, a Tokyo-based broker-dealer
subsidiary, is subject to the capital requirements of the Financial Services Agency. MSIP and MSJS have
consistently operated in excess of their respective regulatory capital requirements.
MS&Co. is required to hold tentative net capital in excess of $1 billion and net capital in excess of $500 million
in accordance with the market and credit risk standards of Appendix E of Rule 15c3-1. MS&Co. is also required
to notify the SEC in the event that its tentative net capital is less than $5 billion. As of December 31, 2009,
MS&Co. had tentative net capital in excess of the minimum and the notification requirements.
Other Regulated Subsidiaries. Certain other U.S. and non-U.S. subsidiaries are subject to various securities,
commodities and banking regulations, and capital adequacy requirements promulgated by the regulatory and
exchange authorities of the countries in which they operate. These subsidiaries have consistently operated in
excess of their local capital adequacy requirements.
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