Morgan Stanley suffers $940m sub-prime hit

Morgan Stanley has been forced to book a $940m (£470m) hit to revenues in its accounts after revealing its exposure to sub-prime debt securitisations in third quarter numbers revealed today.

Reporting a 7% fall in total revenues for Q3 from $1.5bn in Q2 to $1.4bn, the US investment bank said: '…trading included losses of approximately $940m due to the marking to market of loans as well as closed and pipeline commitments. The markdowns reflect the illiquidity created by current market conditions.'

Morgan Stanley's write-down disclosures follow Q3 numbers released by Lehman Brothers yesterday, which showed that Lehman had taken a $700m hit on sub-prime assets.

Tomorrow the other giant investment banks Goldman Sachs and Bear Stearns release their Q3 numbers.

Further reading:

Read Morgan Stanley's full results

US bank takes $700m credit crunch write down