Morgan Stanley 2014 Annual Report Download - page 266

MORGAN STANLEY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The table below sets forth the capital information for MSPBNA at December 31, 2014 and December 31, 2013:
At December 31, 2014 At December 31, 2013
U.S. Basel III Transitional/
Basel I + Basel 2.5 Approach Required
Capital Ratio(1)
U.S. Basel I(2) Required
Capital Ratio(1)Amount Ratio Amount Ratio
(dollars in millions)
Common Equity Tier 1 capital .... $2,468 20.3% 6.5% N/A N/A N/A
Tier 1 capital ................. $2,468 20.3% 8.0% $2,177 26.5% 6.0%
Total capital .................. $2,480 20.4% 10.0% $2,184 26.6% 10.0%
Tier 1 leverage ................ $2,468 9.4% 5.0% $2,177 9.7% 5.0%
N/A—Not Applicable.
(1) Capital ratios required to be considered well-capitalized for U.S. regulatory purposes.
(2) The standards applicable in 2013 included U.S. Basel I as supplemented by Basel 2.5. The Company’s U.S. Subsidiary Banks’ Tier 1 and
total risk-based capital ratios, Tier 1 leverage ratio and RWAs at December 31, 2013 were calculated under this framework.
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 certain minimum capital ratios. 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 for
financial holding companies. At December 31, 2014 and December 31, 2013, the Company’s U.S. Subsidiary
Banks maintained capital at levels in excess of the universally mandated well-capitalized requirements. The
Company’s U.S. Subsidiary Banks maintained capital at levels sufficiently in excess of these “well capitalized”
requirements to address any additional capital needs and requirements identified by the U.S. 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 and the U.S.
Commodity Futures Trading Commission (the “CFTC”). MS&Co. has consistently operated with capital in
excess of its regulatory capital requirements. MS&Co.’s net capital totaled $6,593 million and $7,201 million at
December 31, 2014 and December 31, 2013, respectively, which exceeded the amount required by $4,928
million and $5,627 million, respectively. 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 SEC 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. At December 31, 2014 and December 31, 2013, MS&Co. had tentative net capital in excess of
the minimum and the notification requirements.
MSSB LLC is a registered broker-dealer and introducing broker for the futures business and, accordingly, is
subject to the minimum net capital requirements of the SEC and the CFTC. MSSB LLC has consistently operated
with capital in excess of its regulatory capital requirements. MSSB LLC’s net capital totaled $4,620 million and
$3,489 million at December 31, 2014 and December 31, 2013, respectively, which exceeded the amount required
by $4,460 million and $3,308 million, respectively.
MSIP, a London-based broker-dealer subsidiary, is subject to the capital requirements of the Prudential
Regulation Authority, and MSMS, a Tokyo-based broker-dealer subsidiary, is subject to the capital requirements
of the Financial Services Agency. MSIP and MSMS have consistently operated with capital in excess of their
respective regulatory capital requirements.
262