Megabank Mitsubishi acquires 20% stake in Morgan Stanley

by Gill Montia

Story link: Megabank Mitsubishi acquires 20% stake in Morgan Stanley

Megabank Mitsubishi UFJ, Japan’s largest bank, has agreed to buy 20% of US investment bank, Morgan Stanley, for an estimated $9 billion.

The move is aimed at keeping Morgan Stanley independent but follows China Investment Corporation’s acquisition of a 9.9% stake in the business last year and means that almost one-third of the bank’s stock is held by Far Eastern investors.

Last week’s chaos on Wall Street left Morgan Stanley fighting to survive as Lehman Brothers collapsed and Merrill Lynch sold itself to Bank of America.

At one point it appeared that the bank would merge with Wachovia, which operates retail and commercial banking operations across 21 states.

The speed at which Japanese financial institutions have acted since the face of Wall Street changed last week has surprised analysts.

Yesterday, Nomura, Japan’s biggest brokerage, announced it is buying the Asian business of collapsed investment bank, Lehman Brothers, for around $230 million.

Also yesterday, Morgan Stanley and its rival Goldman Sachs converted their status to a commercial banks, allowing them permanent access to support from the Federal Reserve and the ability to raise capital through deposits.