Morgan Stanley has received a $5 billion (£2.5 billion) cash injection from China Investment Corporation (CIC) after admitting to $9.4 billion in sub-prime mortgage write-offs that dragged its fourth-quarter financials into the red.

Morgan Stanley said that the $5 billion provided by CIC will "help to further bolster the firm's strong capital position and enhance growth opportunities globally, while also building on Morgan Stanley's deep historic ties and market leadership in China". CIC is a state-owned investment group that also owns a stake in Blackstone, the US private equity house.

In October, Bear Stearns agreed to a $1 billion investment from China’s Citic Securities while Citigroup received $7.5 billion in capital from the Abu Dhabi Government's investment arm last month.

John Mack, the chairman and chief executive of Morgan Stanley, said today that he would not accept a bonus for the full-year after a "deeply disappointing" quarter in which a $1.9 billion profit in the final quarter of last year fell to a $3.5 billion loss during the three months to November 30. It is the first loss since the bank was formed in 1935.

Morgan Stanley announced last month that sub-prime mortgage related writedowns would total $3.7 billion as of October 31.

However, sub-prime related asset values have deteriorated rapidly, and Morgan Stanley said today that it recorded an additional $5.7 billion writedown, bringing the total decline to $9.4 billion.

Mr Mack's strategy of expanding in mortgages and making bigger trading bets backfired as losses from securities linked to home loans more than doubled in November.

He ousted co-president Zoe Cruz, who had overseen the fixed-income unit responsible for the mortgage trades, last month and promoted James Gorman and Walid Chammah, who previously ran wealth management and the New York- based firm's European operations.

Last year Mr Mack earned one of the largest bonuses on Wall Street when he was awarded $40 million in shares and options.

Full-year profits of the bank fell this year from $6.3 billion to $2.5 billion and revenues declined 6 per cent to $28 billion.

It is expected that James Cayne, Mr Mack's opposite number at Bears Stearns, will also announce that he will forgo his bonus when the bank reveals full-year figures tomorrow.

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