Lehman Brothers European Investment Banking Conference

Amelia C. FawcettChief Administrative Officer (Europe)February 8, 2002

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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 presented on February 8, 2002.

Notice

This presentation by Morgan Stanley 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 presented on February 8, 2002.

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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 presented on February 8, 2002.

Agenda

Morgan Stanley in Europe

Secular Trends and Firm Strategy

Culture as a Competitive Differentiator

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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 presented on February 8, 2002.

Our Business in EuropeFull Line of Financial Services

Morgan Stanley

InternationalPWM

Investment Banking

Fixed Income

Investment Management

Private Equity Group

Institutional Securities

Individual Investor Group

InvestmentManagement

Consumer Banking Group

Consumer Banking Group

International

Equity

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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 presented on February 8, 2002.

European Presence

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)

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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 presented on February 8, 2002.

Revenues and PBT for Morgan Stanley Europe

Revenues and PBT

(US$ MM)

Source Morgan Stanley 10-K Filings and Morgan Stanley

PBT CAGR 1996-2001: 28%

1,429

328

1,757

399

2,867

1,146

3,848

1,364

5,054

1,646

3,986

1,146

0

1,000

2,000

3,000

4,000

5,000

6,000

1996 1997 1998 1999 2000 2001

Revenues PBT

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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 presented on February 8, 2002.

Headcount vs. PBT

Indexed

Growth in European Headcount and PBT

Source Morgan Stanley

100 100 100

326

251

0

50

100

150

200

250

300

350

1996 2001

PBT Headcount Headcount Excl. Acquisitions

349

100 100 100

326

251

0

50

100

150

200

250

300

350

1996 2001

PBT Headcount Headcount Excl. Acquisitions

349

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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 presented on February 8, 2002.

Efficiency Gains in Securities Processing

Morgan Stanley Institutional Securities Trading Volume and Cost per Trade

Indexed, Global

Source Morgan Stanley

0

100

200

300

400

500

600

1997 1998 1999 2000 2001

GrossVolumes

OperationsExpenses

Cost per Trade0

100

200

300

400

500

600

1997 1998 1999 2000 2001

GrossVolumes

OperationsExpenses

Cost per Trade

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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 presented on February 8, 2002.

The Competitive Landscape - Europe

Announced European M&A

2001 Market Share

European Equity Issues (1)

% of US$ Volume

European SecuritizationInternational Bonds

Note 1. Includes Equity and Equity Linked issues

Source Thomson Financial (M&A), Thomson Financial/IFR (Equity), Dealogic/Bondware (Bonds), Euroweek and Morgan Stanley (Securitization)

11.6

8.6 8.3 8.1 7.6

Citi MS DB JPM ML

9.7 9.2

7.1

5.1 4.9

Citi CSFB BNP MS DB

24.322.2 21.0

18.816.1

GS MS ML UBSW JPM

12.7 12.1 11.6

9.2 8.6

ML MS UBSW DB GS

11.6

8.6 8.3 8.1 7.6

Citi MS DB JPM ML

9.7 9.2

7.1

5.1 4.9

Citi CSFB BNP MS DB

24.322.2 21.0

18.816.1

GS MS ML UBSW JPM

12.7 12.1 11.6

9.2 8.6

ML MS UBSW DB GS

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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 presented on February 8, 2002.

The Competitive Landscape - Europe1997 - 2001 Market Share

European SecuritizationInternational Bonds

Source Thomson Financial (M&A), Thomson Financial/IFR (Equity), Dealogic/Bondware (Bonds), Euroweek and Morgan Stanley (Securitization)

% of US$ Volume

Announced European M&A European Equity Issues (1)

Note 1. Includes Equity and Equity Linked issues

8.67.9 7.4 7.2 7.1

ML MS Citi DB JPM

5.9 5.8

4.4 4.4 4.3

MS Citi DB BNP JPM

34.1 32.0

21.6 21.3 18.8

GS MS JPM ML UBSW

13.5 13.311.2 11

7.8

MS GS UBSW ML CSFB

8.67.9 7.4 7.2 7.1

ML MS Citi DB JPM

5.9 5.8

4.4 4.4 4.3

MS Citi DB BNP JPM

34.1 32.0

21.6 21.3 18.8

GS MS JPM ML UBSW

13.5 13.311.2 11

7.8

MS GS UBSW ML CSFB

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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 presented on February 8, 2002.

Global Secular Trends and Firm StrategyInstitutional Investors

Low cost positions in commodity products Highest quality in complex products Innovation of new products/services Leading intermediary across geography and products

Morgan Stanley Strategy

Higher penetration of financial markets in commerce Continued growth in global trading in financial markets Pressure on margins

Secular Trends

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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 presented on February 8, 2002.

Global Secular Trends and Firm StrategyCorporate Clients

Unique global network of information/contacts for our clients Most experienced professionals to help solve complex problems

and create opportunities for clients Culture and incentive system which dedicates the entire firm to

client objectives

Morgan Stanley Strategy

Secular Trends

Globalization of industry sectors Restructuring of selected economic areas Disintermediation of banks

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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 presented on February 8, 2002.

Growth in European Securities Trading

Average Combined Daily Volume of Major European Stock Exchanges

US$ Bn

Source Morgan Stanley and Stock Exchanges

’95-’01 22%

CAGR

1013

18 21

28

39

33

1995 1996 1997 1998 1999 2000 2001

UK GER FRA ITL CH NL ESP SWE

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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 presented on February 8, 2002.

Growth in European Equity Markets

New Equity Issuance Volumes

US$ Bn

Source Thomson Financial Securities Data

’92-’01 27%

CAGR

8

4152

46

62

98102

127145

70

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

UK Germany France Italy Spain

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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 presented on February 8, 2002.

Market Capitalization

Market Capitalization as a Percentage of GDP

2001

Source Thomson Financial Securities Data, OECD/FactSet

123

73

89

56 51

US EU15 UK France Italy Germany

161

123

73

89

56 51

US EU15 UK France Italy Germany

161

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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 presented on February 8, 2002.

Growth in European Debt Markets

Debt Issuance by European Corporates, Issues >€750 MM

12 Months Moving Average of Volume, US$ Bn per Month

Source Thomson Financial Securities Data

’97-’01 80%

CAGR (1)

Note 1. CAGR of full year volume of debt issuance

0

5

10

15

20

25

1997 1998 1999 2000 2001 2002

EMU

DeutscheTelekomLaunch

Sept 11

0

5

10

15

20

25

1997 1998 1999 2000 2001 2002

EMUEMU

DeutscheTelekomLaunch

DeutscheTelekomLaunch

Sept 11Sept 11

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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 presented on February 8, 2002.

Composition of Debt Markets

Source Thomson Financial Securities Data

EU 1999 EU 2001 US 2001

Outstanding Bonds by Rating

AA/AAA75%

BBB/A25% BBB/A

39%

AA/AAA61%

BBB/A65%

AA/AAA35%

AA/AAA75%

BBB/A25% BBB/A

39%

AA/AAA61%

BBB/A65%

AA/AAA35%

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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 presented on February 8, 2002.

Disintermediation in the US

Percent of Private Non-financial Debt Outstanding

%

Source Federal Reserve Board

25

30

35

40

45

50

1980 1983 1986 1989 1992 1995 1998 2001

Intermediated Through Depository Institutions Intermediated Through Securities Markets

25

30

35

40

45

50

1980 1983 1986 1989 1992 1995 1998 2001

Intermediated Through Depository InstitutionsIntermediated Through Depository Institutions Intermediated Through Securities MarketsIntermediated Through Securities Markets

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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 presented on February 8, 2002.

Disintermediation Underway in Europe

Corporate Debt in Euroland

%

Source ECB

Bonds (Left Scale)

15

17

19

21

23

25

75

77

79

81

83

85

Loans (Right Scale)Bonds (Left Scale)Bonds (Left Scale)

15

17

19

21

23

25

75

77

79

81

83

85

Loans (Right Scale)Loans (Right Scale)

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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 presented on February 8, 2002.

Growth in European Mergers & Acquisitions

Announced Transactions

US$ Bn

Source Thomson Financial Securities Data and Morgan Stanley

’92-’01 15%

CAGR

153 141 141277

380537

818

1,521

1,012

549

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

Friendly Neutral Hostile

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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 presented on February 8, 2002.

Delivering the Firm for Corporate Clients

France Telecom Orange IPO and Exchangeable Bond Convertible

Vivendi Universal Acquisition of USA Networks

BT Wireless Demerger (mmO2) Bond

Arbed and Aceralia Merger with Usinor

General Healthcare Securitisation

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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 presented on February 8, 2002.

Innovation: Prime Brokerage Business

Morgan Stanley Prime Brokerage Net Revenues

Indexed, Global

Net Revenues

1995-2001 CAGR: 23%

Source Morgan Stanley

0

100

200

300

400

500

1995 1996 1997 1998 1999 2000 2001

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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 presented on February 8, 2002.

Innovation: Credit Derivatives Business

Morgan Stanley Credit Derivatives Revenues

Indexed, Global

Source Morgan Stanley

100%

254%

2000 2001

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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 presented on February 8, 2002.

European Market Conditions

46%52%

25% 56%

Source Thomson Financial Securities Data

Market Conditions 2001 vs. 2000

Announced M&A Volume

Completed M&A VolumeDebt Underwriting

Equity Underwriting

% Change in US$ Volume

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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 presented on February 8, 2002.

European Secular TrendsSecular Fundamentals Remain

Equification

“Debtification”

Restructuring

Pension Reform

Fiscal Reform

Europe is one of our great globalopportunities

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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 presented on February 8, 2002.

Requirements for Success

“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)

Importance of Culture

“…[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 4, 2001)

Lehman Brothers European Investment Banking Conference

Amelia C. FawcettChief Administrative Officer (Europe)February 8, 2002