The Morganthe Banner, it looks like the one pictured, can be picked up inside Morganthe’s Chamber. I grabbed it before I thought to take a picture. It was above the second chance chest after the battle.
This is the final battle in Khrysalis. So it’s in the Shadow Palace. If you haven’t been there in awhile, you go through the teleport to the Hive. Go through the opening on the left. Then go by the creatures (Arachna Gladiator). At that opposite end, go up the ladder, then go up the next ladder. Go into the House of the Magi, go straight through the door, at the other side, that looks like it’s covered in a web gate. Straight through the next area with the tree, to the Shadow Palace.