europe_update_nov2002.ppt

This slide is part of a presentation by Morgan Stanley and is intended to be viewed as part of that presentation. The presentation is based on information generally
available to the public and does not contain any material, non-public information. The presentation has been prepared solely for informational purposes and is
neither an offer to sell nor the solicitation of an offer to buy any security or instrument and has not been updated since it was originally given on 12 November, 2002
Europe Update
12 November 2002
Morgan Stanley

Morgan Stanley - European Overview
Morgan Stanley
1
Morgan Stanley Europe
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
Investment Banking Division
Mergers,
Acquisitions &
Restructuring
Real Estate
Group
Corporate
Finance
Global Capital Markets
Equity Capital Debt Capital
Markets Markets
Securitised
Products
Group

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
Global and European Revenues
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

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

397
628
1,362
1,497
777
487
346
284
160
128
96
136
177 191
130 121
0
200
400
600
800
1,000
1,200
1,400
1,600
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Dollar Volume(1)
$ Bn
The M&A Cycle: European Announced Transactions
Morgan Stanley
5
Notes
1. 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
2. As of 31 October 2002
Source Thomson Financial
(2)

Morgan Stanley
European M&AActivity
6
Notes
1. Includes announced transactions each with an aggregate value of $100 MM. As of 31 October 2002
2. GIG includes Aerospace, Automotive, Building Prods/Construction, Metal/Mining, Transportation
3. Includes - Biotech/Chemicals/Healthcare, Consumer Prods, Retail/Wholesale, Casino/Gaming/Entertainment, Business Svcs, Textiles
(2) (3)
4 3
17 16
15 19
22 9
34
41
6 10
2 2
0
20
40
60
80
100
2001 2002 YTD
Technology Communications/Media Utilities/Energy Financial Institutions
Global Industries Real Estate Other
Transaction Volume by Industry(1)
%
13
14
13
16
10
9
35
31
29
31
0
20
40
60
80
100
2001 2002 YTD
France Germany Italy UK Other
Transaction Volume by Region(1)
%
(2) (3)

European M&AActivity (cont’d)
Morgan Stanley
7
71
65
66
66
71
73
74
78
81
85
0
10
20
30
40
50
60
70
80
90
UBSW JP M or gan CSFB M er r i l l
Lynch
Lehman
Announced European Transactions - ‘02 YTD(1)
$ Bn
76
60
128
109
100
96
80 79
72
73
0
20
40
60
80
100
120
140
M or gan
Stanl ey
JP M or gan M er r i l l
Lynch
Ci ti gr oup/
SSB
UBS
War bur g
Mergers and Acquisitions Completed - ‘02 YTD(1)
$ Bn
Note
1. 2002 YTD data reflects transactions announced from January 1 through 31 October 2002
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
29.0
20.1
30.4
18.3
29.5
35.7
59.7
35.8
30.5
46.5 46.1
39.4
33.3
24.3
44.9
28.1
41.8
47.2
22.0
63.5
76.9
99.2
19.7
24.6
10.1
26.7
13.1
13.4
12.4
8.6
111.3
238.0
217.0
297.2
167.5
0
50
100
150
200
250
300
1998 1999 2000 2001 2002
Consumer Air/Auto/Ship Industrial
Energy/Oil/Gas Telecoms/IT Others
(1)
Debt Issuance by Sector
$US Bn
Government Yields
(%)
Corporate Absolute Yields
(%)
Note
1. 2002 YTD data reflects transactions announced from 1 January through 31 October 2002
Source Capital Bondware Source Bloomberg
Source Bloomberg

Morgan Stanley
Corporate Issuance - 1999-2002 YTD
27
97
99
63
94
167
111
124
19
28
20
24
130
190
157
140
306
484
385
0
50
100
150
200
250
300
350
400
450
500
1999 2000 2001 2002YTD
310
Euros Sterling USD Others
Corporate Issuance(1)
Bn
Note
1. As of 7 November 2002
9
Source Capital Bondware

Morgan Stanley
10
Rating Distribution in Euros
(%)
Source Capital Bondware
AAA
19%
AA
11%
A
25%
BBB
45%
AAA
6% AA
7%
A
30%
BBB
56%
2001
2002 YTD
Rating Distribution in Sterling
(%)
Rating Distribution in USD
(%)
Source Capital Bondware Source Thomson Financial
Note
AAA
17%
AA
17%
A
35%
BBB
30%
AAA
14%
AA
16%
A
39%
BBB
30%
AAA
8% AA
9%
A
55%
BBB
28%
AAA
27%
AA
8%
A
38%
BBB
27%
2001
2002 YTD
2001
2002 YTD
Corporate Issuance - 2001-2002 YTD(1)

European Securitisation Market
Morgan Stanley
11
95
122
81
57
38
45
28
0
20
40
60
80
100
120
140
160
180
200
1996 1997 1998 1999 2000 2001 2002 YTD
European ABS Issuance: 1996-2002 YTD
$ Bn
Source Morgan Stanley Research
(1)
Note

European Securitisation Issuance
Morgan Stanley
12
European ABS Issuance by Country
%
European ABS Issuance by Asset Class
%
UK
39%
Germany
4%
Spain
6%
Italy
22%
Holland
11%
France
4%
Other
7%
European
5%
Ireland
2%
2001
2001
RM BS
40%
Autos
4%
Leases
3%
CLOs
12%
Other
17%
CM BS
10%
NPLs
4%
Operating Company
5%
Credit Cards
1%
Consumer Loans
3%
Aircraft
1%
UK
39%
Germany
9%
Spain
6%
Italy
18%
Holland
7%
France
7%
Other
3%
European
10%
2002 YTD(1)
RM BS
37%
Autos
6%
Leases
6%
CDOs
15%
Other
13%
CM BS
11%
Operating Company
5%
Credit Cards
5%
Consumer Loans
1%
2002 YTD(1)
Note

Global High Yield Market Trends
Morgan Stanley
4.1
8.0
14.3
18.1
15.6
6.3
3.7
45.3
84.3
39.5
85.9
126.1
115.7
63.3
49.5
92.3
53.9
104.0
141.7
122.0
66.9
0
20
40
60
80
100
120
140
160
1996 1997 1998 1999 2000 2001 2002YTD
European Issues Non-European Issues
Global Issues 1996-2002 YTD(1)
US$ Bn
Source Morgan Stanley Database
1.4
2.4
0.4
1.2
1.7
3.7
6.3
15.6
18.1
14.3
8.0
4.1
0.8
4.8
8.6
10.7
4.6
3.6
5.6
7.7
7.4
0.8
1.6
1.9
2.2
2.4
0.5
0.1
0
2
4
6
8
10
12
14
16
18
20
1996 1997 1998 1999 2000 2001 2002YTD
US$ € Issues £ Issues Others
European Issues 1996-2002 YTD(1)
US$ Bn
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

Equity Secondary Trading Volumes
Morgan Stanley
14
5,447
6,836
9,691
8,470
6,201
0
2,000
4,000
6,000
8,000
10,000
1998 1999 2000 2001 2002 YTD
0.0%
4.0%
8.0%
Total Market Treated Volume Morgan Stanley Traded Volume %
(1)
European Equity Traded Volumes
$ Bn
Source Data provided directly from exchanges and Morgan Stanley estimates
Note

Efficiency Gains in Securities Processing
Morgan Stanley
15
0
100
200
300
400
500
600
1997 1998 1999 2000 2001 2002
Gross Volumes Operations Expenses Cost per Trade Agent Bank/Clearing
Morgan Stanley Institutional Securities Trading Volume and Costs
Indexed, Europe
Source Morgan Stanley
(1)
Note
1. External costs include Clearing and Agent Bank expenses but exclude brokerage and exchange fees
YTD

European Asset Management
The European Market Opportunity
Morgan Stanley
16
5
6
15
25
0
5
10
15
20
25
30
US Europe Japan Other
2001 Global Assets Under Management
$ Trillion
Source “The Future of Asset Management in Europe”, Sept. 2002,
Oliver Wyman & Co. / UBS
0
1
2
3
4
5
U
K
&
I
r
e
l
a
n
d
G
e
r
m
a
n
y
&
A
u
s
t
r
i
a
F
r
a
n
c
e
B
e
n
e
l
u
x
S
w
i
t
z
e
r
l
a
n
d
N
o
r
d
i
c
R
e
g
i
o
n
I
t
a
l
y
S
p
a
i
n
&
P
o
r
t
u
g
a
l
Institutional Private banking
Retail: Life & Pensions Retail: Mutual Funds
2001 Asset Ownership by Source
$ Trillion
Source “The Future of Asset Management in Europe”, Sept. 2002,
Oliver Wyman & Co. / UBS

Morgan Stanley Investment Management
Tokyo
Mumbai
Amsterdam
London
New York
Philadelphia
Houston
Chicago
Singapore
San Francisco
• 6th largest fixed income
manager in the US
• Top 20 institutional manager
in the US
• Top 10 foreign asset manager in Japan
• 1st foreign manager to be awarded
Enhanced Fund Manager status
• Largest foreign mutual fund
manager in Italy
• 3rd largest foreign fund
company in Spain
17
• Morgan Stanley SICAV (Societe
d'Investissement a Capital Variable)
receives 26 prestigious investment
performance awards from Standard &
Poor’s in 2002
• 2nd 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
22
17
43
27
23
13
88
57
0
10
20
30
40
50
60
70
80
90
100
2000 2005E
< $250,000 $250,000 - 5 MM > $5 MM
Global Net Investible Assets
€ Trillion CAGR ’00-’05E
12%
10%
5%
PWM
target
segments
Nordic
6%
Italy
16%
Spain
9%
UK
22%
Germany
30%
France
17%
European High Net Worth Individuals(1)
Number of European High Net Worth Individuals:
Total: 5,187,000
Note
1. HNW individuals defined as having $3 MM of liquid assets

Four Key trends are crystallizing and changing the factors of success on the market
European Private Wealth Management
Key Market Trends
Morgan Stanley
19
Evolution of the nature of wealth
Customer expectations
Rules of the game
Globalisation

European Credit Cards Business
A Large and Highly Competitive Market
Morgan Stanley
20
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
1
9
9
3
1
9
9
4
1
9
9
5
1
9
9
6
1
9
9
7
1
9
9
8
1
9
9
9
2
0
0
0
2
0
0
1
Cards Loans
UK Overall Market Growth
Cards MM/Loans £ Bn
Source British Bankers’ Association

The Competitive Landscape - Europe
1997 - 2002 YTD (1) Market Share
Morgan Stanley
21
19.8
23.4
23.7
35.2
36.6
0
5
10
15
20
25
30
35
40
Goldman
Sachs
M organ
Stanley
JP M organ M errill Lynch UBS W
Announced European M&A
% of US$ Volume
7.6
7.8
8.0
9.4
9.9
0
2
4
6
8
10
12
Goldman
Sachs
UBS W M organ
Stanley
Deutsche Bank M errill Lynch
European Equity Issues(2)
% of US$ Volume
Source Thomson Financial/IFR
6.8
8.1
8.1
8.7
10.5
0
2
4
6
8
10
12
Deutsche Bank JP M organ M organ
Stanley
Citi/SSB UBS W
International Bond Issuance(3)
% of US$ Volume
Source Bondware
6.7
8.1
8.4
8.8
8.9
0
1
2
3
4
5
6
7
8
9
10
Deutsche Bank M organ
Stanley
ABN AM RO Citi/SSB BNP Paribas
European Securitization
% of US$ Volume
Source Euroweek and Morgan Stanley
Notes
1. October 31, 2002
2. Includes Equity and Equity Linked issues
3. Includes European debt issuance excluding US market. Excludes national banks

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
“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)
23
“…[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)
“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)

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)
24

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