Japan’s Mitsubishi UFJ Financial Group Inc. completed its $9 billion investment in Wall Street investment bank Morgan Stanley on Monday.

The rescue deal should help assuage concerns about Morgan’s capital position, but Fitch Ratings warns that the business still faces operational challenges.

Fitch said it sees the closing of the equity deal as a positive development that strengthens the bank’s capital position and should address near-term equity market concerns, but it also believes the recent stresses on Morgan Stanley’s core businesses are likely to continue for the foreseeable future.

The rating agency has downgraded Morgan Stanley’s long and short-term Issuer Default Ratings, reflecting continued expected challenges in profitability and funding despite the additional capital injection from Mitsubishi UFJ. Fitch’s rating downgrade also takes into account the continued challenges Morgan Stanley faces in its transition to a financial holding company, it said. The rating outlook remains negative to reflect the weakened earnings potential of investment banking operations in this tumultuous economic period, it added.

Fitch noted that it expects Morgan Stanley to experience a material reduction in revenues as its three strongest revenue generators face declines. “Customers are migrating away from its premier prime brokerage business due to deleveraging and concerns around the protection of client assets. Morgan Stanley’s investment banking activities are also facing economic headwinds, as is its commodities trading business,” it said.

Morgan Stanley is shifting to a bank holding company structure which Fitch expects to result in greater focus on risk appetite and risk reduction. Deposits will provide a less credit sensitive source of funds, Fitch noted, although it expects a majority will be generated from brokered accounts and as a consequence will be more interest rate sensitive than the typical bank.

Fitch also said that Morgan Stanley has bolstered its liquidity through asset sales and debt issues that were invested in cash and Treasuries. “While Fitch believes the firm has sufficient liquidity to meet near term debt maturities, counterparties remain highly sensitive to the systemic risk and may reduce uncommitted and committed lines or increase collateral margin thereby raising the need for additional liquidity,” it said.