Morgan Stanley Challenges Federal Reserve's Capital Requirements

The U.S. Federal Reserve has set new capital levels for major banks after stress tests. Morgan Stanley is challenging its designated level, seeking a downward adjustment. The decision will be announced by the end of September. Previously, Goldman Sachs successfully reduced its stress capital buffer.

The U.S. Federal Reserve announced on Friday the finalization of new capital levels for the nation's largest banks, effective from October 1 following the June stress tests. However, Morgan Stanley is seeking reconsideration of its upcoming capital level.

The central bank noted that the capital requirements could be updated if a proposal to average stress test results over two years is adopted. The stress tests evaluate how banks might fare during an economic downturn, adjusting their capital buffers based on potential losses.

Morgan Stanley is appealing for a reduction in its stress capital buffer, with a decision from the Fed expected by the end of September. Previously, Morgan Stanley had a buffer set at 6%, while Goldman Sachs lowered its buffer after an appeal.