Morgan Stanley on Wednesday said it had sold a $5bn stake to Chinaâ??s new sovereign wealth fund

The bank said it would issue about $5bn in new capital with mandatory conversion into stock to China Investment Corporation, a $200bn fund. In return CIC will be able to convert the investment into a stake of up to 9.9 per cent, but will remain a passive investor, with no role in managing the company.

The move followed an announcement that Morgan Stanley had been forced to write off a further $5.7bn, on top of a previously announced $3.7bn charge already taken on its holdings of troubled structured credit products in the fourth quarter and is aimed at strengthening Mogran Stanleyâ??s capital position.