MORGAN STANLEY LOSES $911M IN ARCHEGOS BUT PROFIT JUMPS

Morgan Stanley (MS.N) lost nearly $1 billion from the collapse of family office Archegos Capital Management, the bank said on Friday, muddying its 150% jump in first-quarter profit that was powered by a boom in trading and deal-making, Noor Hussain and Elizabeth Marshall reported for Reuters.

Morgan Stanley was one of several banks that had exposure to Archegos, which defaulted on margin calls late last month and triggered a fire sale of stocks across Wall Street.

The company lost $644 million by selling stocks it held related to Archegos' positions, and another $267 million trying to "derisk" them, Morgan Stanley Chief Executive James Gorman said on a call with analysts.

"I regard that decision as necessary and money well spent," he said. The bank did not disclose losses right away because they were not deemed material in the context of its overall results, he added.

Morgan Stanley is not alone in nursing losses as a prime broker for Archegos. Switzerland's Credit Suisse Group AG and Japan's Nomura Holdings Inc. bore the brunt, having lost $4.7 billion and $2 billion, respectively. Goldman Sachs Group Inc., Deutsche Bank and Wells Fargo & Co. also handled Archegos positions but exited them without losses, Reuters and other media outlets have reported.

Morgan Stanley did not realize that Archegos had similar, concentrated positions at several banks across Wall Street, Chief Financial Officer Jonathan Pruzan told Reuters. As such, the collateral requirements it imposed were only reflecting Archegos's particular risks at Morgan Stanley, not the risks across the fund's broader portfolio.

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