Morgan Stanley 2014 Annual Report Download - page 117

VaR—Value-at-Risk.
(1) The RWAs for each category in the above table reflect both on- and off-balance sheet exposures, where appropriate.
(2) Represents the estimated impact of the change in methodology to present December 31, 2013 RWAs on a pro forma basis under the U.S.
Basel III Advanced Approach transitional rules.
(3) Amount reflects assets not in a defined category, non-material portfolios of exposures and unsettled transactions.
The Company is required to calculate capital ratios under both the Advanced Approach and the Standardized
Approach, represented as U.S. Basel I as supplemented by Basel 2.5, as of December 31, 2014, in both cases
subject to transitional provisions. The capital ratios calculated under the Advanced Approach were lower than
those calculated under the Standardized Approach, represented as U.S. Basel I as supplemented by Basel 2.5, and
therefore, are the binding ratios for the Company at December 31, 2014 as a result of the capital floor.
The following table summarizes the Company’s Common Equity Tier 1 capital, Additional Tier 1 capital and
Tier 2 capital at December 31, 2014 and December 31, 2013:
At December 31, 2014 At December 31, 2013
U.S. Basel III
Transitional/
Advanced Approach U.S. Basel I(1)
(dollars in millions)
Common Equity Tier 1 capital:
Common stock and surplus ........................................ $21,503 $21,622
Retained earnings ............................................... 44,625 42,172
Accumulated other comprehensive (loss) ............................. (1,248) (1,093)
Regulatory adjustments and deductions:
Less: Net goodwill .......................................... (6,612) (6,595)
Less: Net intangible assets (other than goodwill and mortgage servicing
assets) .................................................. (632) (3,279)
Less: Credit spread premium over risk-free rate for derivative
liabilities ................................................ (161) N/A
Less: Net deferred tax assets ................................... (580) (2,879)
After-tax debt valuation adjustment(2) ........................... 158 1,275
Adjustments related to accumulated other comprehensive income ..... 462 278
Expected credit loss over eligible credit reserves(3) ................. (10) N/A
Other adjustments and deductions .............................. (181) (1,584)
Total Common Equity Tier 1 capital ................................ $57,324 $49,917
Additional Tier 1 capital:
Preferred stock ................................................. $ 6,020 $ 3,220
Trust preferred securities .......................................... 2,434 4,761
Nonredeemable noncontrolling interests .............................. 1,004 3,109
Regulatory adjustments and deductions:
Less: Net deferred tax assets ................................... (2,318) N/A
Less: Credit spread premium over risk-free rate for derivative
liabilities ................................................ (644) N/A
After-tax debt valuation adjustment(2) ........................... 630 N/A
Expected credit loss over eligible credit reserves ................... (39) N/A
Other adjustments and deductions .............................. (229) N/A
Additional Tier 1 capital .......................................... $ 6,858 $11,090
Total Tier 1 capital .............................................. $64,182 $61,007
Tier 2 capital:
Subordinated debt ............................................... $ 8,339 $ 5,559
Trust preferred securities .......................................... 2,434 N/A
Other qualifying amounts(3) ....................................... 27 284
Regulatory adjustments and deductions .............................. (10) (850)
Total Tier 2 capital .............................................. $10,790 $ 4,993
Total capital .................................................... $74,972 $66,000
N/A—Not Applicable.
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