Morgan Stanley moves to take full control at JV with Citi

Morgan Stanley wants to buy out Citigroup’s remaining stake in their wealth management joint venture Morgan Stanley Smith Barney this year, in a deal that could be worth about $10bn

Morgan Stanley, the largest US broker by assets, has a 51% stake in Smith Barney, formerly a division of Citi Global Wealth Management. It already has options to take a 14% stake starting in May, and the remaining stakes by 2014, but wants to bring forward the date it takes full control over the business.

Citigroup first announced it was selling a 51% stake in Smith Barney to Morgan Stanley in January 2009, after suffering significant losses from collateralized debt obligations. In September 2009, Citigroup said it would ‘eventually’ sell the remaining stake to Morgan Stanley.

Morgan Stanley was able to pay $2.7bn in cash for the stake, thanks to a $9bn investment from Mitsubishi UFJ Financial Group, which took a 21% stake in Morgan Stanley.

Its clientele ranges from individual retail investors through to family foundations and large corporations. Morgan Stanley has some 17,600 financial advisers, with $1.6trn in client assets under management or administration.

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