Morgan Stanley may face a fiscal fourth-quarter write-down of as much as $5.7 billion for mortgage-related losses, CNBC has learned.
The pretax amount is $2 billion higher than the amount the Wall Street company said it will write down for mortgage-related trading losses in September and October. Morgan Stanley's fiscal fourth quarter ends this month.
On Thursday, Zoe Cruz was ousted as Morgan Stanley's co-president. Several analysts have said her departure is related to the mortgage losses.
Analysts on average expect Morgan Stanley to post a fourth-quarter loss of 4 cents per share, according to Reuters Estimates.
Cruz's resignation was part of a broad management shake-up at the second-largest U.S. investment bank. Walid Chammah and James Gorman were named co-presidents. Robert Scully, co-president with Cruz, is joining a new Office of the Chairman. Morgan Stanley's co-trading head, Neal Shear, is now chairman of the company's commodities business.
Cruz resigned three weeks after Morgan Stanley said it suffered $3.7 billion of subprime mortgage-related losses in September and October.
"Zoe clearly is accepting responsibility for the trading disappointment in the fourth quarter," said Brad Hintz, analyst at Sanford C. Bernstein & Co. Morgan Stanley's shares are down 23 percent this year, a worse performance than its peers.
Cruz, 52, joined Morgan Stanley in 1982 as a foreign exchange trader and rose to become head of fixed income trading by 2000.
A source said on Nov. 9 that Mack had tapped Cruz as the leading candidate to succeed him, despite the write-downs that had been disclosed two days before.