Morgan Stanley failed to match Wall Street rivals Goldman Sachs and JP Morgan, as a $2.3bn (€1.6bn) charge driven by tightening credit spreads on the bank’s debt punched a hole in second-quarter sales and trading revenues that pushed its institutional securities arm into the red and left the bank nursing a bigger than expected group loss.

Despite the losses at both the institutional securities unit and at group level, compensation rose roughly a quarter on both fronts, according to the bank's second-quarter results released today.