Investor Presentaiton
MORGAN STANLEY BANK ASIA LIMITED
NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2020
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
1.
Offsetting of financial assets and financial liabilities
Where there is a currently legally enforceable right to set off the recognised amounts and an intention to
either settle on a net basis or to realise the asset and the liability simultaneously, financial assets and
financial liabilities are offset and the net amount is presented on the statement of financial position. In
the absence of such conditions, financial assets and financial liabilities are presented on a gross basis.
m.
n.
Employee compensation plans
i) Equity-settled share-based compensation plans
Morgan Stanley issues awards in the form of restricted stock units ("RSUS") to employees of the
Morgan Stanley Group for services rendered to the Company. Awards are equity-settled and the cost of
the equity-based transactions with employees is measured based on the fair value of the equity
instruments at grant date. The fair value of RSUs is based on the market price of Morgan Stanley
common stock on the date the award is granted, measured as the volume-weighted average price on the
date of grant ("VWAP"). The fair value of RSUs not entitled to dividends until conversion is measured
at VWAP reduced by the present value of dividends expected to be paid on the underlying shares prior
to the scheduled conversion date.
Awards generally contain clawback and cancellation provisions. Certain awards provide Morgan
Stanley the discretion to clawback or cancel all or a portion of the award under specified circumstances.
Compensation expense for these awards is adjusted for changes in the fair value of the Morgan Stanley's
common stock until conversion.
The Company recognises compensation cost over the relevant vesting period for each separately vesting
portion of the award. An estimation of awards that will be forfeited prior to vesting due to the failure to
satisfy service conditions is considered in calculating the total compensation cost to be amortised over
the relevant vesting period.
Under Morgan Stanley Group chargeback agreements, the Company pays Morgan Stanley for the
procurement of shares. The Company pays Morgan Stanley the grant date fair value and any subsequent
movement in fair value up to the time of conversion of the award and delivery of shares to the
employees.
Share-based compensation expense is recorded within ‘Other expense' in the income statement.
ii) Deferred cash-based compensation plans
Morgan Stanley awards deferred cash-based compensation on behalf of the Company for the benefit of
employees, providing a return to the participating employees based upon the performance of various
referenced investments. Compensation expense for deferred cash-based compensation awards is
calculated based on the notional value of the award granted, adjusted for changes in the fair value of the
referenced investments that employees select.
The Company recognises compensation cost over the relevant vesting period for each separately vesting
portion of the award. Forfeitures due to failure to satisfy service conditions are accounted for as they
occur.
Deferred cash-based compensation expense is recorded within in ‘Other expense' in the income
statement. The liability for the awards is measured at fair value and is included within ‘Other liabilities'
in the statement of financial position.
Post-employment benefits
The Company operates defined contribution post-employment plans. Additionally, the Branch of the
Company participates in a defined contribution plan, the Singapore Central Provident Fund.
Contributions due in relation to the Company's defined contribution post-employment benefit plan are
recognised in ‘Other expense' in the income statement when payable.
Details of the plans are given in note 32 to these financial statements.
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