Morgan Stanley CEO says his firm is ready for 'Basel III endgame' — the sweeping new global rules on banking

cnbc.com:

SINGAPORE — Morgan Stanley Chairman and CEO James Gorman said his firm will be able to cope with «any form» that new banking regulations end up taking, but added he expects some watering down before the final rules are confirmed.

U.S. regulators on Tuesday defended their plans for a sweeping set of proposed changes to banks' capital requirements, speaking in front of the U.S. Senate Banking Committee. They are aimed at tightening regulation of the industry after two of its biggest crises in recent memory — the 2008 financial crisis, and the March upheaval in regional lenders.

These proposed changes in the U.S. seek to incorporate parts of international banking regulations known as Basel III, which was agreed to after the 2008 crisis and has taken years to roll out.

Regulators say the changes in the proposals are estimated to result in an aggregate 16% increase in common equity tier 1 capital requirements — which is a measure of an institution's presumed financial strength and is seen as a buffer against recessions or trading blowups.

«I think it will come out differently from the way it's been proposed,» Gorman told CNBC Thursday in an exclusive interview on the sidelines of Morgan Stanley's annual Asia-Pacific conference in Singapore.

«It's important to point out it's a proposal. It's not a rule, and it's not done.»

«I think [the U.S. banking regulators] are listening,» Gorman added. «I've spent many years with the Federal Reserve. I was on the Fed board in New York for six years and I just think they are trying to find the right answer.»

«I'm not sure the banks need more capital,» Morgan Stanley's outgoing CEO said. «In fact, the Fed's own stress test says they don't. So there's that… sort of purity of purpose and in