Morgan Stanley 2010 Annual Report Download - page 93

The Company’s goal is to achieve an optimal mix of secured and unsecured funding while ensuring continued
growth in stable funding sources. The Institutional Securities business segment emphasizes the use of
collateralized short-term borrowings to limit the growth of short-term unsecured funding, which is generally
more subject to disruption during periods of financial stress. The ability to fund less liquid assets on a secured
basis may be impaired in a stress environment. To manage this risk, the Company obtains longer-term secured
financing for less liquid assets and has minimal reliance on overnight financing. In addition, the Company holds
a portion of its Global Liquidity Reserve against a potential disruption to its secured financing capabilities. This
potential disruption may be in the form of additional margin or reduced capacity to refinance maturing trades.
The Company continues to extend the tenor of secured financing for less liquid collateral and seeks to build a
sufficient buffer to offset the risks discussed above.
Unsecured Financing. The Company views long-term debt and deposits as stable sources of funding for core
inventories and less liquid assets. Securities inventories not financed by secured funding sources and the majority
of current assets are financed with a combination of short-term funding, floating rate long-term debt or fixed rate
long-term debt swapped to a floating rate and deposits. The Company uses derivative products (primarily interest
rate, currency and equity swaps) to assist in asset and liability management and to hedge interest rate risk (see
Note 12 to the consolidated financial statements).
Temporary Liquidity Guarantee Program (“TLGP”). In October 2008, the Secretary of the U.S. Treasury
invoked the systemic risk exception of the FDIC Improvement Act of 1991, and the FDIC announced the TLGP.
Based on the Final Rule adopted on November 21, 2008, the TLGP provides a guarantee, through the earlier of
maturity or June 30, 2012, of certain senior unsecured debt issued by participating Eligible Entities (including the
Company) between October 14, 2008 and June 30, 2009. At December 31, 2010 and December 31, 2009, the
Company had $21.3 billion and $23.8 billion, respectively, of senior unsecured debt outstanding under the
TLGP. There have been no issuances under the TLGP since March 31, 2009. See Note 11 to the consolidated
financial statements for further information on commercial paper and long-term borrowings.
Short-Term Borrowings. The Company’s unsecured short-term borrowings consist of commercial paper, bank
loans, bank notes and structured notes with maturities of 12 months or less at issuance.
The table below summarizes the Company’s short-term unsecured borrowings:
At
December 31,
2010
At
December 31,
2009
(dollars in millions)
Commercial paper ........................................... $ 945 $ 783
Other short-term borrowings ................................... 2,311 1,595
Total .................................................. $3,256 $2,378
Deposits. The Company’s bank subsidiaries’ funding sources include bank deposits, repurchase agreements,
federal funds purchased, certificates of deposit, money market deposit accounts, commercial paper and Federal
Home Loan Bank advances.
Deposits were as follows:
At
December 31,
2010(1)
At
December 31,
2009(1)
(dollars in millions)
Savings and demand deposits .................................. $59,856 $57,114
Time deposits(2) ............................................ 3,956 5,101
Total .................................................. $63,812 $62,215
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