Bank Boosts Its Mortgage Portfolio

Morgan Stanley, which closed its mortgage business in Britain and slashed lending elsewhere, is still investing in its fast-growing Russian mortgage bank, the bank's co-president was quoted as saying in a newspaper interview.

The unit doubled its mortgage portfolio to $450 million last year, Morgan Stanley co-president Walid Chammah told Vedomosti last week.

"Now the situation is more complicated than it was a year ago. Interest rates have increased and lending criteria are tougher; overdue debt has increased a little bit, but it's still within the norm," Chammah said. "But regardless of higher rates and tough criteria, the business is growing faster than it was a year ago, because demand is still there."

He said the bank was considering strategic options and continued to invest in the meantime "so we have a good business if we decide to sell it and if we decide to keep it."

Russian newspapers reported last month that the bank had put City Mortgages, purchased in 2006 for $185 million, up for sale as it reduced exposure to home lending around the world.

The country's flood of public offerings has slowed to a trickle, but Chammah said Morgan Stanley planned to manage more.

"Infrastructure companies are very popular right now, and so are consumer and retail companies," he said. "The market is opening."