RIYADH, 24 March 2007 — Morgan Stanley, a leading global investment bank, signed an agreement yesterday with the Capital Group to form Morgan Stanley Saudi Arabia (MSSA) - the bank’s first direct investment in Saudi Arabia.

Attending the signing ceremony was John Mack, chairman and CEO of Morgan Stanley, Morgan Stanley’s President for the Middle East and North Africa Region George Makhoul, Chairman of the Capital Group Fahad Almubarak, as well as CEO of the Capital Group Basel Algahdib.

“This agreement is a significant landmark in our Middle East growth strategy,” said Mack after signing the agreement. “The Kingdom of Saudi Arabia is already a key market for Morgan Stanley and for our clients. We are looking forward to working with Fahad, Basel, and their team to establish the leading investment banking franchise in the Kingdom.”

He said Morgan Stanley’s investment with the Capital Group was part of its strategy to go local and global at the same time.

Almubarak has been named the executive chairman of MSSA. Alghadib will be the CEO. MSSA will initially employ 25 professionals to operate its branches in the Kingdom.

Speaking in the press conference following the signing agreement, Almubarak said MSSA’s capital has still yet to be worked out. He said, however, that it would be “sizable”, adding that, “Morgan Stanley will have controlling interest of over 50 percent ownership.” “I think the investment is not defined by the capital, but by commitment to the market,” commented Mack on the capital of MSSA.

According to Almubarak, the newly formed investment banking franchise will operate in three major cities initially: Riyadh, Jeddah, and Alkhobar. “We have already secured preliminary approval from the Capital Market Authority. Now we are ready for full application and we expect the approval within a few months,” he said.

The new firm will execute the largest rights issue for Sipchem (Saudi International Petrochemical Company), according to him. He did not specify any date.

MSSA will offer clients a broad range of services, including investment banking, capital markets, sales and trading, asset management, and private wealth management.