Morgan Stanley says may record goodwill impairment

NEW YORK (Reuters) - Morgan Stanley, under siege from investors worried about its ability to survive the credit crisis, warned that the ongoing market turmoil might trigger a fourth-quarter impairment in its goodwill.

In its quarterly results filing to the Securities and Exchange Commission, the fifth-largest U.S. bank said it performed an interim test on goodwill but determined there was no impairment.

Goodwill is an intangible asset that results from a company paying more than the fair market value of assets or a business. Companies recognize an impairment -- a write down -- if they conclude that the assets' profit-generating potential is permanently reduced.

"However, given the financial market and economic events that occurred in September 2008, the company will perform an interim impairment test for goodwill during the fourth quarter of fiscal 2008, which could result in an impairment charge," the bank said.

According to the same filing, Morgan Stanley had $2.96 billion of goodwill at the end of August, compared with about $36 billion in shareholders' equity.

Morgan Stanley shares closed 22 percent lower on Friday at $9.68 amid widespread worries the bank was not strong enough to survive the ongoing credit crunch.

There were also speculation that Mitsubishi UFJ Financial Group may back out or amend its agreement last week to acquire a 21 percent stake in Morgan Stanley for $9 billion.

(Reporting by Joseph A. Giannone, additional reporting by Dan Wilchins; Editing by Tim Dobbyn)