Fitch Ratings Places Morgan Stanley (MS) On Rating Watch Negative

Fitch Ratings has placed Morgan Stanley's (NYSE: MS) 'A/F1' long- and short-term Issuer Default Ratings (IDRs) and the 'a' Viability Rating (VR) on Rating Watch Negative.

The firm notes MS is undergoing a significant strategic shift in its business, with the stated goal of reducing volatility from traditional investment banking activity and generating more stable fee income streams from Global Wealth Management (GWM).

Fitch said successful execution could reduce the company's risk profile. However, wealth management is a highly competitive and fragmented sector. Fitch believes it may be several years before contributions by GWM are consistently and proportionately significant. Overall firm profitability has been weak since the onset of the recent global downturn, in both absolute terms and relative to peers. Fitch does note the favorable steps MS has taken to date in extending and diversifying its funding sources and de-levering its balance sheet.

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