On 1 October 2025 the Federal Reserve announced that it would reduce Morgan Stanley’s stress capital buffer from 5.1 % to 4.3 %, effective that day. The decision was made after the bank requested reconsideration of its preliminary buffer level. The new buffer level lowers the amount of capital Morgan Stanley must hold above its Basel III CET1 ratio.
The reduction brings the bank’s aggregate U.S. Basel III Standardized Approach Common Equity Tier 1 (CET1) ratio to 11.8 %. This change directly impacts the bank’s regulatory capital profile, decreasing the capital that must be set aside for stress scenarios and improving capital efficiency. The lower buffer also reduces regulatory capital costs, potentially freeing capital for growth initiatives or shareholder returns. The move signals regulator confidence in Morgan Stanley's risk management and capital adequacy.
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