NEW YORK – Capital markets in 2012 are better than they were in 2011, Morgan Stanley Chief Executive James Gorman said on Wednesday, adding that his bank is in a “very good position for Basel III standards.”
Gorman, speaking to CNBC from Davos, Switzerland, said confidence will rise after euro zone stability improves, while stressing that Morgan Stanley is in a very solid position. “If you had all sovereigns, all corporates and all financial institutions blow up in Europe at the same time, Morgan Stanley would still be fine,” he said.
Gorman also said Morgan Stanley would not need to raise capital in the near term. Morgan Stanley’s capital levels have been a concern for investors because it will need to comply with new, stricter rules set by the Basel Committee and U.S. regulators.
The Basel III accord, agreed to by the Basel Committee, an international group of regulators, will require banks to hold at least 7 percent of core Tier 1 capital in the form of retained earnings or pure equity.
There are also concerns because Morgan Stanley may need a big chunk of cash to purchase the next stake of its Morgan Stanley Smith Barney venture from Citigroup Inc.
Morgan Stanley currently owns 51 percent of the wealth management business and has the option to buy another 14 percent in May at fair market value. Gorman reiterated his commitment to buy the business on Wednesday, a purchase he said will take a priority over stock buybacks or dividends in the near-term.