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From Davos, Maria Bartiromo interviewed Morgan Stanley’s CEO James Gorman on CNBC.Their conversation ranged from the Voelker Rule to the bank’s MBIA settlement to the possibility of returning capital to shareholders this year.
But Gorman’s strongest statement was on Morgan Stanley’s exposure to Europe. This is what he had to say (skip ahead to the 9:20 mark below for these comments):
“If you had all sovereigns, all corporates and all financial institutions in Europe blow up at the same time, Morgan Stanley would still be fine. The global markets would not be fine…the risk around our profile and exposure to Europe I thought was absurd in the fall and I think we proved that with the disclosures we’ve put put out and what we’ve done to derisk since.”
This statement goes several levels beyond a typical CEO statement in its strength and broad reach and cuts against our previous reporting indicating that Morgan Stanley remains massively exposed to European sovereigns.
Indeed, it is hard to understand how Morgan Stanley, or any other financial institution in the world, would ‘be fine’ if all European sovereigns, corporations and financial institutions collapsed simultaneously.
It is a statement you are unlikely to hear Gorman utter again and one he may end up regretting.
But Gorman will be on Bloomberg TV later today, so we’ll get a chance to see if he sticks with this statement or backtracks.
Here’s the full video (Via CNBC):