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Fri, Mar 27, 2009 - Page 10 News List

Morgan Stanley, MUFG to merge securities firms


Japanese megabank Mitsubishi UFJ Financial Group (MUFG) and troubled Wall Street giant Morgan Stanley announced plans yesterday to merge their securities firms in Japan to weather the credit crunch.

The two companies described the move as “a first step” in a broader alliance after MUFG threw Morgan Stanley a US$9 billion lifeline last year in the midst of the worst financial crisis since the Great Depression.

The joint venture will be owned 60 percent by the Mitsubishi UFJ Financial Group (MUFG) and 40 percent by Morgan Stanley, a joint statement said.

They aim to close a deal by next March.

The merger of Mitsubishi UFJ Securities Co and Morgan Stanley Japan Securities Co will create one of Japan’s top brokerage firms, with more muscle to challenge industry leader Nomura Holdings.

Last year MUFG bought a 21 percent stake in Morgan Stanley as Japanese financial firms took a slice of US rivals reeling from the credit crisis.

MUFG will pick the president and chief executive of the securities joint venture, while Morgan Stanley will chose the chairman.

Japanese banks, once criticized for being too timid, have been less hard hit by the subprime loan crisis than many peers in North America and Europe.

But MUFG has not escaped unscathed from the credit crunch and turmoil on global stock markets, posting a net loss of US$430 million for the nine months to December.

Morgan Stanley, which lost US$2.29 billion in the quarter to November, announced in January a deal to merge its global wealth management business with that of troubled rival Citigroup.

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