Wall Street giant Morgan Stanley is to write down an additional $5.7 billion of mortgage-related assets, taking the firm's total announced write-downs since the third quarter to $10.3 billion. The move pushed the investment house to the first quarterly loss in its 73-year history.

Morgan Stanley now ranks third among banks taking losses stemming from the turmoil in the mortgage market, behind UBS and Citigroup which have so far writtten down $13.7 billion a piece.

Like UBS and Citigroup, Morgan Stanley has also unveiled an agreement with a sovereign fund, in this case Chinese, that will inject $5 billion in fresh capital through equity units with mandatory conversion into common stock.

UBS arranged a $9.75 billion investment by the Singapore Investment Corporation, while Citi took a $7.5 billion injection by the Abu Dhabi Investment Authority.

China Investment Corporation's total passive ownership in Morgan Stanley common shares amounts to 9.9 per cent, the firm said. The equity units will pay a fixed annual payment rate of 9 per cent and convert into Morgan Stanley common shares in 2010.

In a written statement, chief executive John Mack called the write-downs for the quarter as a whole "deeply disappointing" and said he would not accept a bonus for 2007, which last year topped $40 million.

"Across the firm, we have moved aggressively to make the necessary changes, and these isolated losses by a small trading team in one part of the firm should not overshadow the momentum we see in virtually all of our other businesses," Mack said.

But revenue at the global wealth management unit increased 23 per cent to $1.8 billion and pre-tax profit advanced 124 per cent to $378 million. Morgan Stanley recently named former Fidelity Investments executive Ellyn McColgan president and chief operating officer of global wealth management, effective in April 2008.

Asset management reported a 9.7 per cent gain in pretax profit, to $294 million.

Overall, Morgan Stanley posted a loss from continuing operations of $3.59 billion for the fourth quarter ended 30 November 2007, as net revenue was a negative $450 million, compared with positive $7.85 billion in the same period last year.

It said its fixed income sales and trading group recorded a net loss of $7.9 billion in the fourth quarter, after the writedowns.

Equity sales and trading revenue climbed 72 per cent to $2.5 billion and investment banking revenue rose 4 per cent to almost $1.6 billion.