Morgan Stanley bailed out by Beijing after $9bn write-off
More bad news for the economy and the banking sector as the slide continues.
Morgan Stanley yesterday became the latest bank to announce a bailout from a foreign government as the Wall Street firm reported the first quarterly loss in its 73-year history after taking writedowns of $9.4 billion (£4.7 billion) on mortgage-related investments.
The writedowns, which took Morgan Stanley to a $3.56 billion fourth-quarter loss, were so severe that the bank was forced to agree a $5 billion cash injection from the Chinese Government to prop up its capital base.
The Beijing Government's China Investment Corporation (CIC) will inject $5 billion into Morgan Stanley in return for a 9.9 per cent stake.
This makes it the bank's second-biggest shareholder after State Street, the Boston asset manager.