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Citi, Morgan Stanley look to consolidate
Monday, January 12, 2009 | No comments posted.
NEW YORK (AP) — Citigroup and Morgan Stanley may announce as early as today a deal to combine their brokerages, a move analysts say could trigger a fresh wave of consolidation in the troubled and thinning banking industry.
The potential deal between Citi and Morgan Stanley underscores the problems still facing the industry after a year in which several well-known financial firms toppled under the weight of rising losses tied to bad mortgages.
“This really shows the continued vulnerability of the banking system,” said Keith Springer, president of Capital Financial Advisory Services.
Morgan Stanley is likely to pay Citigroup between $2 billion and $3 billion for a 51 percent stake in the brokerage Smith Barney, a person close to the negotiations said Saturday.
Morgan Stanley would then have the option to buy the rest of Smith Barney over the next three to five years, the person said. The person spoke on condition of anonymity because he was not authorized to speak about the ongoing talks.
The potential deal between Citi and Morgan Stanley underscores the problems still facing the industry after a year in which several well-known financial firms toppled under the weight of rising losses tied to bad mortgages.
“This really shows the continued vulnerability of the banking system,” said Keith Springer, president of Capital Financial Advisory Services.
Morgan Stanley is likely to pay Citigroup between $2 billion and $3 billion for a 51 percent stake in the brokerage Smith Barney, a person close to the negotiations said Saturday.
Morgan Stanley would then have the option to buy the rest of Smith Barney over the next three to five years, the person said. The person spoke on condition of anonymity because he was not authorized to speak about the ongoing talks.
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