Flight from Morgan Stanley brokerage: Hundreds of billions drawn after Lehman panic

[marmar]

from The Financial Times:



Flight from Morgan Stanley brokerage
By James Mackintosh in London

Published: September 25 2008 23:15 | Last updated: September 25 2008 23:15

Morgan Stanley lost close to a third of assets in its prime brokerage last week, amounting to hundreds of billions of dollars, as hedge funds panicked after the collapse of Lehman Brothers and moved to rival banks.

The losses, confirmed by several people familiar with the business, will deal a big blow to Morgan Stanley as its prime brokerage – the world’s biggest – is one of its most profitable and successful businesses.

The flight of cash and stock out of the division occurred as spreads in the credit default swap market ballooned, but has since slowed to a trickle, these people said. Morgan Stanley declined to comment.

Several of Morgan Stanley’s hedge fund clients said they were likely to return to the bank once markets stabilised. The prime brokerage, which provides hedge funds with custody and loans and assists short selling, is highly rated by many managers.

Many of the world’s biggest hedge funds moved their assets to commercial banks regarded as safer last week, as they and their investors worried that Morgan Stanley could follow Lehman into trouble. “The primary thing our investors have been trying to understand is counterparty risk,” said the head of one large London fund. ......(more)

The complete piece is at: http://www.ft.com/cms/s/0/fc0e74be-8b43-11dd-b634-0000779fd18c.html

[Coventina]

1. It's official, I'll be working 'til I die

I'm starting to think that if you haven't already retired, retirement is not going to be an option.

And many of those currently retired may find themselves back in the workforce before too long....