Morgan Stanley International: European Overview Update

Europe Update 12 November 2002 Morgan Stanley

Morgan Stanley - European Overview Morgan Stanley 1 Morgan Stanley Europe Investment Banking Division Mergers, Acquisitions & Restructuring Real Estate Group Corporate Finance Global Capital Markets Equity Capital Debt Capital Markets Markets Securitised Products Group Investment Management Institutional Investment Management Private Equity Individual Investor Group Private Wealth Management Equity Fixed Income Institutional Securities Investment Banking Consumer Banking Group Consumer Banking Group International

Morgan Stanley’s European Presence Morgan Stanley UK (1977) France (1990) Germany (1987) Ireland (1998) Italy (1989) Luxembourg (1989) Netherlands (1997) Portugal (2000) Russia (1994) Spain (1993/1999) Sweden (1999) Switzerland (1986) Israel (2001) South Africa (1994) 2

European Revenues 1996 and 2001 Morgan Stanley 3 Europe 18% Europe 12% 1996 2001 Global Revenues $12,023MM European Revenues $1,429MM Global Revenues $21,896MM European Revenues $3,986MM Source Morgan Stanley 10-K Filings and Morgan Stanley Global and European Revenues

European Market Conditions Morgan Stanley 4 Announced M&A Volume Completed M&A Volume Debt Underwriting Equity Underwriting Source Thomson Financial Securities Data 29% 28% 26% 30%
Note
1 January to 31 October
Market Conditions 2002 vs. 2001 (1) % Change in US$ Volume

The M&A Cycle: European Announced Transactions Morgan Stanley 5
Notes
Includes announced transactions, each with an aggregate value of $100 MM or more. Includes transactions with estimated values. Excludes terminated transactions. Future terminations of pending transactions will reduce totals shown
As of 31 October 2002
Source Thomson Financial (2) Dollar Volume (1) $ Bn

Morgan Stanley European M&A Activity 6 Source Thomson Financial
Notes
Includes announced transactions each with an aggregate value of $100 MM. As of 31 October 2002
GIG includes Aerospace, Automotive, Building Prods/Construction, Metal/Mining, Transportation
Includes - Biotech/Chemicals/Healthcare, Consumer Prods, Retail/Wholesale, Casino/Gaming/Entertainment, Business Svcs, Textiles
Source Thomson Financial (2) (3) (2) (3) Transaction Volume by Industry (1) % Transaction Volume by Region (1) %

European M&A Activity (cont’d) Morgan Stanley 7
Note
2002 YTD data reflects transactions announced from January 1 through 31 October 2002
Source Thomson Financial Source Thomson Financial Announced European Transactions - ‘02 YTD (1) $ Bn Mergers and Acquisitions Completed - ‘02 YTD (1) $ Bn Market Share (%) 29.5 25.2 23.2 22.1 18.6 18.3 17.5 16.8 16.7 13.9 Market Share (%) 21.4 20.4 19.7 18.7 18.3 18.0 17.8 16.7 16.7 16.4 UBS Warburg Morgan Stanley JP Morgan Deutsche Bank CSFB Citigroup/ SSB Merrill Lynch Lazard Lehman Rothschild Morgan Stanley Goldman Sachs JP Morgan Deutsche Bank Merrill Lynch Rothschild Citigroup/ SSB CSFB UBS Warburg Lehman Brothers

Morgan Stanley Bond Market Environment 8
Note
2002 YTD data reflects transactions announced from 1 January through 31 October 2002
Source Capital Bondware Source Bloomberg Source Bloomberg Debt Issuance by Sector $US Bn Government Yields (%) Corporate Absolute Yields (%)

Morgan Stanley Corporate Issuance - 1999-2002 YTD Corporate Issuance (1) Bn Note 1. As of 7 November 2002 9 Source Capital Bondware

Morgan Stanley 10 Source Capital Bondware 2001 2002 YTD Source Capital Bondware Source Thomson Financial Note 1. As of 31 October 2002 2001 2002 YTD 2001 2002 YTD Corporate Issuance - 2001-2002 YTD (1) Rating Distribution in Euros (%) Rating Distribution in Sterling (%) Rating Distribution in USD (%)

European Securitisation Market Morgan Stanley 11 Source Morgan Stanley Research (1) Note 1. As of 31 October 2002 European ABS Issuance: 1996-2002 YTD $ Bn

European Securitisation Issuance Morgan Stanley 12 Source Morgan Stanley Research 2001 2001 Source Morgan Stanley Research 2002 YTD (1) 2002 YTD (1) Note 1. As of 31 October 2002 European ABS Issuance by Country % European ABS Issuance by Asset Class %

Global High Yield Market Trends Morgan Stanley Source Morgan Stanley Database Source Morgan Stanley Database 5.5% 5.2% 11.0% 17.4% 26.6% 8.7% European as a % of Total: 8.4% 3.4% 27.8% 31.4% 52.5% 66.4% 90.3% Non-USD Issues as a % of Total: 67.1% 13
Note
Global Issues 1996-2002 YTD (1) US$ Bn European Issues 1996-2002 YTD (1) US$ Bn

Equity Secondary Trading Volumes Morgan Stanley 14 Source Data provided directly from exchanges and Morgan Stanley estimates
Note
European Equity Traded Volumes $ Bn

Efficiency Gains in Securities Processing Morgan Stanley 15 Source Morgan Stanley (1) Note 1. External costs include Clearing and Agent Bank expenses but exclude brokerage and exchange fees YTD Morgan Stanley Institutional Securities Trading Volume and Costs Indexed, Europe

European Asset Management The European Market Opportunity Morgan Stanley 16 Source “The Future of Asset Management in Europe”, Sept. 2002, Oliver Wyman & Co. / UBS Source “The Future of Asset Management in Europe”, Sept. 2002, Oliver Wyman & Co. / UBS 2001 Global Assets Under Management $ Trillion 2001 Asset Ownership by Source $ Trillion

Morgan Stanley Investment Management Tokyo Mumbai Amsterdam London New York Philadelphia Houston Chicago Singapore San Francisco
6 th largest fixed income manager in the US
Top 20 institutional manager in the US
Top 10 foreign asset manager in Japan
1 st foreign manager to be awarded Enhanced Fund Manager status
Largest foreign mutual fund manager in Italy
3 rd largest foreign fund company in Spain
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Morgan Stanley SICAV (Societe d'Investissement a Capital Variable) receives 26 prestigious investment performance awards from Standard & Poor’s in 2002
2 nd Place European Funds – larger managers over 5 years category by Standard & Poor’s
Morgan Stanley Source Morgan Stanley Investment Management, Pensions & Investments, InvestorForce, Nelson Marketplace

European Private Wealth Management Morgan Stanley 18 Source The Boston Consulting Group, Global Wealth 2001 12% 10% 5% PWM target segments Source The Boston Consulting Group, Global Wealth 2001 Number of European High Net Worth Individuals: Total: 5,187,000
Note
HNW individuals defined as having $3 MM of liquid assets
Global Net Investible Assets € Trillion CAGR ’00-’05E European High Net Worth Individuals (1)

European Private Wealth Management Key Market Trends Morgan Stanley 19 Evolution of the nature of wealth Customer expectations Rules of the game Globalisation Source The Boston Consulting Group, Global Wealth 2001 Four Key trends are crystallizing and changing the factors of success on the market

European Credit Cards Business A Large and Highly Competitive Market Morgan Stanley 20 Source British Bankers’ Association UK Overall Market Growth Cards MM/Loans £ Bn

The Competitive Landscape - Europe 1997 - 2002 YTD (1) Market Share Morgan Stanley 21 Source Thomson Financial Source Thomson Financial/IFR Source Bondware Source Euroweek and Morgan Stanley
Notes
October 31, 2002
Includes Equity and Equity Linked issues
Includes European debt issuance excluding US market. Excludes national banks
Announced European M&A % of US$ Volume European Equity Issues (2) % of US$ Volume International Bond Issuance (3) % of US$ Volume European Securitization % of US$ Volume

Vision and Values Our Culture is Our Competitive Advantage Morgan Stanley 22 Connecting people, ideas and capital, we will be the world’s First Choice for achieving financial aspirations First Choice Core Values 6. Client Centricity 1. Integrity 3. Entrepreneurial Spirit 5. Team Work 2. Excellence 4. Respect for Individuals and Cultures

Requirements for Success Importance of Culture Morgan Stanley 23 “ Despite leaner times, Morgan Stanley has been one of the most successful European banks and was the first major tenant at Canary Wharf, helping to build the area’s success .” “ After September 11, hotlines and counselling sessions were used heavily. As one employee wrote: “Morgan Stanley showed its true character and strength during the tragedy.” The Sunday Times, 100 Best Companies to Work for 2002 (March, 2002) “ By general consensus in the investment banking community, there is something special about Morgan Stanley's London office” “… what keeps them here is a team culture, a sense that this is a meritocracy…” Fortune , Best Companies to Work for – 10 Great Companies in Europe (February 4, 2002) “… [Morgan Stanley’s] recent success has been nothing short of sensational.” “ Several employees in our survey praise Morgan Stanley for being a meritocracy.” The Sunday Times , 50 Best Companies to Work for 2001 (February, 2001)

Morgan Stanley Awards: July 2001 - October 2002
Recognised as one of “Europe’s Top 10 Companies to Work For” – Fortune , Europe Edition (March 2002)
Ranked 21st in the Sunday Times “100 Best Companies to Work For in the UK” – (March 2002)
Best High Grade Research Team – Credit Magazine (May 2002) and Euromoney (2002)
Best Overall Bank for Online Equities and Best Site for Equity New Issues, Equity Trading, Prime Brokerage, Analytics and Commodities – Euromoney Internet Awards (2002)
Eurobond House of the Year – IFR (Dec 2001)
Financial Bond (Senior Debt) House of the Year – IFR (Dec 2001)
European MTN House of the Year - IFR (Dec 2001)
Best Lead Manager of Supranational Bonds – Euroweek (2001)
Most Aggressive House on Bond Pricing (as voted by borrowers) – Euroweek (2001)
Most Innovative House for New Ideas, Structures & Opportunities (as voted by borrowers) – Euroweek (2001)
Best French M&A House – Euromoney (July 2002)
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Morgan Stanley International: European Overview Update

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Morgan Stanley International: European Overview Update — Presentation Transcript