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Morning Briefing

Morgan Stanley will pay $3.2 billion to settle charges raised by an investigation by the Residential Mortgage-Backed Securities Group into poor quality mortgage-backed securities involved in the 2008 crisis. $2.6 billion will go to the US Justice Department, while $550 million will go to the state of New York and 22.5 million to Illinois. "We are pleased to have finalized these settlements involving legacy residential mortgage-backed securities matters," a Morgan Stanley spokesman said. "The firm has previously reserved for all amounts related to these settlements".

The Japanese stock market showed the largest weekly percentage drop since the 2008 crisis, according to the Wall Street Journal. Down 11 percent on the week and with a year-to-date decline of 21 percent, the decline of the Japanese market is almost as steep as the recent losses seen in mainland China's market. Other Asian stock markets, including those in China, Hong Kong and South Korea, also showed a sharp decline this week.

HSBC has dropped its plans to freeze all pay in 2016, a reversal of a decision made only two weeks ago. A memo from Chief Executive Stuart Gulliver said pay raises would come from a bonus pool originally intended for 2017 payments, Reuters reports. The hiring freeze put in place in Q4 of 2015 will remain, and HSBC still intends to reach annual savings of up to $5 billion by the end of 2017. This news comes just days before HSBC's board will decide whether to stay in London or move the bank's headquarters to Hong Kong.

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