why buy gold doesn't help a bank, page-39

timber, from the article,

"Which other bank has a huge and heretofore undisclosed multi-billion derivative "easter egg" on its books?"

Below we present a chart showing the historical distribution of derivative holdings at Morgan Stanley HoldCo, and Morgan Stanley Bank NA, also per the OCC.

What is happening is that Morgan Stanley is moving ever more derivatives from its just Baa1-downgraded (the third lowest investment grade rating) HoldCo to its still A-rated (even if at the lowest A3 rating) depositor entity (yes, Morgan Stanley apparently has deposits, but don't look for ATMs). The simple reason being that MS' counterparties are increasingly reluctant to transact with Morgan Stanley unless they get the implicit backing of some real cash as opposed to just promises by a bank that may be the next in line after JPM to report of a VaR "glitch."
In other words: more and more depositors are being involuntarily placed on the hook to allow the bank to even have the remote chance of generating the same kinds of "hedge fund" type-profits as it did in the past 3 years. Because without its derivative book, MS is just another non-prop trading bank, whose return on equity in a ZIRP environment is at best laughable thanks to a Net Interest Margin which is, well, non-existent.


So how many more Banks are like this?
That profit chart will soon be losses.