Morgan Stanley 2015 Annual Report Download - page 123

Top Ten Country Exposures at December 31, 2015.
Country Net Inventory(1)
Net
Counterparty
Exposure(2)(3) Loans
Lending
Commitments
Exposure Before
Hedges Hedges(4) Net Exposure(5)
(dollars in millions)
United Kingdom:
Sovereigns .............................. $ (88) $ 56 $ — $ — $ (32) $ (166) $ (198)
Non-sovereigns .......................... 654 10,649 4,643 7,161 23,107 (1,722) 21,385
Subtotal ............................... $ 566 $ 10,705 $ 4,643 $ 7,161 $ 23,075 $ (1,888) $ 21,187
Brazil:
Sovereigns .............................. $ 3,536 $ — $ — $ — $ 3,536 $ — $ 3,536
Non-sovereigns .......................... (28) 519 1,097 87 1,675 (650) 1,025
Subtotal ............................... $ 3,508 $ 519 $ 1,097 $ 87 $ 5,211 $ (650) $ 4,561
China:
Sovereigns .............................. $ 616 $ 166 $ — $ — $ 782 $ (508) $ 274
Non-sovereigns .......................... 1,423 404 956 262 3,045 (64) 2,981
Subtotal ............................... $ 2,039 $ 570 $ 956 $ 262 $ 3,827 $ (572) $ 3,255
Italy:
Sovereigns .............................. $ 1,950 $ (19) $ — $ — $ 1,931 $ (61) $ 1,870
Non-sovereigns .......................... 174 661 9 667 1,511 (198) 1,313
Subtotal ............................... $ 2,124 $ 642 $ 9 $ 667 $ 3,442 $ (259) $ 3,183
Canada:
Sovereigns .............................. $ (61) $ 90 $ — $ — $ 29 $ — $ 29
Non-sovereigns .......................... (143) 1,661 239 1,550 3,307 (163) 3,144
Subtotal ............................... $ (204) $ 1,751 $ 239 $ 1,550 $ 3,336 $ (163) $ 3,173
Singapore:
Sovereigns .............................. $ 1,950 $ 197 $ — $ — $ 2,147 $ — $ 2,147
Non-sovereigns .......................... 76 278 48 122 524 (30) 494
Subtotal ............................... $ 2,026 $ 475 $ 48 $ 122 $ 2,671 $ (30) $ 2,641
France:
Sovereigns .............................. $ (682) $ — $ — $ — $ (682) $ — $ (682)
Non-sovereigns .......................... (103) 1,751 14 2,310 3,972 (1,149) 2,823
Subtotal ............................... $ (785) $ 1,751 $ 14 $ 2,310 $ 3,290 $ (1,149) $ 2,141
United Arab Emirates:
Sovereigns .............................. $ 2 $ 1,162 $ — $ — $ 1,164 $ (56) $ 1,108
Non-sovereigns .......................... (95) 455 181 350 891 (16) 875
Subtotal ............................... $ (93) $ 1,617 $ 181 $ 350 $ 2,055 $ (72) $ 1,983
Netherlands:
Sovereigns .............................. $ (71) $ — $ — $ — $ (71) $ — $ (71)
Non-sovereigns .......................... 267 623 188 1,230 2,308 (280) 2,028
Subtotal ............................... $ 196 $ 623 $ 188 $ 1,230 $ 2,237 $ (280) $ 1,957
Australia:
Sovereigns .............................. $ (115) $ 21 $ — $ — $ (94) $ — $ (94)
Non-sovereigns .......................... 449 348 168 875 1,840 (123) 1,717
Subtotal ............................... $ 334 $ 369 $ 168 $ 875 $ 1,746 $ (123) $ 1,623
(1) Net inventory represents exposure to both long and short single-name and index positions (i.e., bonds and equities at fair value and CDS based on a notional
amount assuming zero recovery adjusted for any fair value receivable or payable). As a market maker, the Company transacts in these CDS positions to facilitate
client trading. At December 31, 2015, gross purchased protection, gross written protection, and net exposures related to single-name and index credit derivatives
for those countries were $(164.9) billion, $161.5 billion and $(3.4) billion, respectively. For a further description of the triggers for purchased credit protection
and whether those triggers may limit the effectiveness of the Company’s hedges, see “Credit Exposure—Derivatives” herein.
(2) Net counterparty exposure (i.e., repurchase transactions, securities lending and OTC derivatives) takes into consideration legally enforceable master netting
agreements and collateral.
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