Entries Tagged 'Morgan Stanley' ↓
September 22nd, 2008 — Credit Crisis, Credit Crunch, Economy, Investment Banking, Investment Banks, Japan, Layoffs, Mitsubishi, Morgan Stanley
Morgan Stanley [[MS]] has agreed to sell one-fifth of the company to one of Japan’s largest Banks, Mitsubishi UFJ Financial Group.
Mitsubishi, headquartered in Tokyo, said it had entered into negotiations to acquire between 10% and 20% of Morgan Stanley common stock.
The announcement comes after Sunday night’s decision by federal regulators to convert Morgan Stanley and Goldman Sachs into bank holding companies.
Morgan Stanley CEO John Mack issued the following statement: “This strategic alliance with Mitsubishi UFJ can put Morgan Stanley in an even stronger position as we look to realize the opportunities we see in the rapidly changing financial marketplace.”
Although the two companies have not determined a price for the deal, a 20% stake of Morgan’s $30 billion market capitalization would be worth about $6 billion.
The deal would also give the Japanese bank a seat at the table on Morgan Stanley’s board of directors.
September 22nd, 2008 — Bailout, Commercial Banks, Congress, Conversion, Credit Crisis, Credit Crunch, Economy, Goldman Sachs, Government, Investment Banking, Investment Banks, Morgan Stanley, Paulson, Regulation
The separation of investment banking and commercial banking has ended.
Wall Street’s last two stand-alone investment banks - Goldman Sachs [[GS]] and Morgan Stanley [[MS]] - converted into bank holding companies on Sunday night - allowing them to purchase retail banks and streamline the way they borrow from the Federal Reserve.
While it gives the former investment banks more stability and easier access to capital, it also puts Goldman and Morgan under the watchful eye of the Fed, as it increased government’s regulatory oversight. As banks, Morgan and Goldman will be forced by this oversight to take less risk, which will ultimately mean fewer profits.
The conversion is the latest in a series of events on Wall Street as it stumbles through a global credit crisis. In the past week, the government has announced a $700 billion plan to bail out the financial sector by buying up troubled mortgage assets and an $85 billion loan to insurance giant AIG. Also during the roller-coaster week, Lehman Brothers filed for bankruptcy and Bank of America took control of Merrill Lynch.
September 18th, 2008 — Citibank, Credit Crisis, Economy, Mergers, Morgan Stanley, Wachovia
Morgan Stanley’s CEO John Mack made an unsuccessful effort last evening to persuade Citigroup’s CEO Vikram Pandit to enter into a merger.
According to the New York Times, Mack told Pandit, “We need a merger partner or we’re not going to make it.”
Pandit, who was once a senior investment banker at Morgan Stanley, told Mack that Citigroup was not interested.
Having failed with Citi, Mack entered into discussions with Wachovia and several other banks.
Morgan Stanley shares are down about 40% so far this week as investors are growing increasingly worried about access to funding in the current environment.