| Capital Structure
As of June 30, 2011, the company’s Tier 1 capital ratio, under Basel I, was approximately 16.8% and Tier 1 common ratio was approximately 14.6%.
Book value per share was $30.17 based on 1.9 billion shares outstanding. BVPS declined approximately $2.29 mainly due to the increase in period end common shares outstanding resulting from the MUFG preferred stock conversion.
On June 30, 2011, MUFG exchanged all of its shares of Series B Non-Cumulative Non-Voting Perpetual Convertible Preferred Stock into Morgan Stanley common stock. MUFG received approximately 385 million shares of the company’s common stock, including approximately 75 million shares resulting from the adjustment to the conversion ratio, pursuant to the transaction agreement.
Earlier on April 21, 2011, Morgan Stanley and Mitsubishi UFJ Financial Group Inc. announced that they had entered into an agreement to convert MUFG’s outstanding convertible preferred stock in Morgan Stanley into Morgan Stanley common stock.
Outlook: Some firms believe that the MUFG conversion strengthened the company’s capital position and also provided financial flexibility by freeing up nearly $800 million per year in preferred dividend payments.
Dividends
On August 15, 2011, Morgan Stanley paid a quarterly dividend of $0.05 per share to shareholders of record as of July 29, 2011.
On May 13, 2011, Morgan Stanley paid a quarterly dividend of $0.05 per share to shareholders of record as of April 29, 2011.
On April 15, 2011, Morgan Stanley paid a regular quarterly dividend on the outstanding shares of each of the following preferred stock issues:
• Floating Rate Non-Cumulative Preferred Stock, Series A – $250.00 per share (equivalent to $0.25000 per Depositary Share)
• 10% Non-Cumulative Non-Voting Perpetual Convertible Preferred Stock, Series B – $25.00 per share
• 10% Non-Cumulative Non-Voting Perpetual Preferred Stock, Series C – $25.00 per share.
Outlook: Some of the firms believe that as the company will be required to maintain a higher level of capital to meet Basel III requirements, it will not hike dividend in the near term. They also believe that though the company might increase its dividend in the near term, it would not be substantial. However, the company’s first priority would be share buyback and investing for future growth, rather than dividend hike.
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