Morgan Stanley CEO sends memo to reassure employees
(Reuters) - Morgan Stanley (MS.N) Chief Executive James Gorman sent a company-wide memo on Monday morning, acknowledging "an enormous amount of confusion and misinformation" about the bank as its stock price entered a third week of steep declines.
"In fragile markets, where fear triumphs over common sense, these things are bound to happen," Gorman wrote. "It is easy to respond to the rumor of the day, but that is not usually productive."
Shares of the second-largest investment bank fell 7.6 percent on Monday to close at $12.47, a level not seen since December 2008. Morgan Stanley is down 54 percent so far this year and 25 percent since mid-September.
In addition to Gorman's memo, which included attachments of reports from two Wall Street analysts saying the market reaction has been overdone, Mitsubishi UFJ Financial Group Inc (8306.T) issued a statement Monday afternoon expressing its support of Morgan Stanley. Mitsubishi is the bank's largest shareholder, with a 22.4 percent stake.
Shares of Morgan Stanley have been hit harder than rivals like Goldman Sachs Group Inc (GS.N) amid persistent rumors that it has an oversized exposure to troubled Euro zone banks.
Gorman urged employees to read a report from Wells Fargo & Co analyst Matthew Burnell, whose analysis "underscores that our exposure to the Euro zone and France, in particular, is not a concern," said Gorman. He also cited Credit Suisse analyst Howard Chen's look at Morgan Stanley's capital funding and liquidity, saying it "highlights the dramatic improvement to our financial strength over the last three years."
A spokeswoman confirmed the contents of the memo, which was provided by a source who received it.
(Reporting by Jed Horowitz and Lauren Tara LaCapra in New York, editing by Bernard Orr)