Morgan Stanley throws its hat into ambitious e-trade deal with £10.7bn acquisition

 

Morgan Stanley said it will buy discount brokerage E-Trade Financial Corp in a stock deal worth about £10.7bn ( $13bvillion), the biggest acquisition by a Wall Street bank since 2008 financial crisis. Morgan Stanley CEO James Gorman enters into an ambitious course with a $13billion e-trade deal. In 2009 Morgan Stanley purchased Smith Barney from Citigroup and the new broker-dealer operates under the name Morgan Stanley Smith Barney the largest wealth management business in the world.

Morgan Stanley’s main rival, Goldman Sachs Group Inc, has also been forging with an upstart retail bank, as others including Bank of America Corp and UBS are concentrating on basic lending and wealth management services.

“We believe federal regulators are likely to approve Morgan Stanley’s acquisition of E-Trade though the review could take longer than realised as we except the Federal Reserve to conduct a systemic risk review” according to a researcher from Cowen Washington Research Group.

Strict capital and liquidity rules were imposed on lenders with more than $50billion in assets, making it unattractive for mid-sized firms to acquire more assets.

Gorman said he attempted to buy E-Trade twice in 2002 when he was at Merrill Lynch and then again in 2007 at Morgan Stanley before reinitiating talks late last year and finally sealing the deal.