Mitsubishi acquires stake in Morgan Stanley

Shares in Morgan Stanley increased today after the news that Japan’s largest bank, Mitsubishi UFJ Financial Group, is to pay $9 billion (£4.8 billion) for a stake of up to 20% in the bank.

The news follows the announcement earlier today that Morgan Stanley, along with Goldman Sachs, have changed status and have received regulatory approval to convert themselves into traditional bank holding companies.

The conversion of Goldman Sachs and Morgan Stanley marks the end of the New York investment bank.

A link-up with Mitsubishi UFJ, which is the world’s second largest bank holding company with $1.1 trillion (£595 billion) in deposits, would allow Morgan Stanley to boost its capital base and retain its independent status.

John J. Mack, Morgan Stanley’s chairman and chief executive, said Mitsubishi UFJ would be a valuable partner as we convert to a bank holding company and strengthen our bank services and deposit base.

Last week, there were reports that Morgan Stanley was in talks with Wachovia, America’s fourth largest bank, and China Investment Corp (CIC), Chinese sovereign wealth fund.

The deal follows an historic week on Wall Street after last week’s collapse of banking giant, Lehman Brothers, and the rescue of US insurer AIG.

Furthermore, Bank of America acquired Merrill Lynch in a deal worth $50 billion (£28 billion), while in the UK, Lloyds TSB acquired HBOS.

Discuss this in the Finance Markets forums

Story link: Mitsubishi acquires stake in Morgan Stanley