Morgan Stanley forced to write-down £1.1 billion

Morgan Stanley, the second largest US investment bank, was forced to write-down $2.3 billion (£1.1 billion) on mortgage related investments.

The banking giant has become the latest Wall Street bank to be hit by turmoil in the financial markets.

Morgan Stanley announced a net profit of $1.55 billion (£776 million) in the 3 months to 29 February, but that was a better performance than expected. Investors had expected the results to be worse and shares soared on Tuesday.

Earlier this week, Goldman Sachs and Lehman Brothers saw their profits halved.

Chairman and chief executive John Mack, said while many of our businesses are facing challenging market conditions that we expect to continue in the months ahead, we are satisfied with how Morgan Stanley navigated the ongoing market turmoil.

Mr Mack sought to calm investors’ fears about a cash crunch on Wall Street following the Bear Stearns crisis. The bank’s results were a boost for Mack, who is trying to help the bank recover from a year when it suffered $9.4 billion in mortgage-related write-downs.

Earlier this year, Morgan Stanley announced it was shedding 1,000 jobs worldwide. As part of the plan, the bank closed its UK residential mortgage arm and reduced its lending business in the US.

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