WORLD> America
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WORLD> America
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Morgan Stanley shares soar as MUFG deal closes
(Agencies)
Updated: 2008-10-14 09:02 Morgan Stanley estimates that thanks to the cash infusion, it now has a Tier 1 capital ratio of 15.7 times and a gross leverage ratio below 20 times, considerably stronger than a year ago. Morgan also disclosed it reduced total assets by 9 percent to less than $900 billion since the end of August. Schorr stopped short of rating the stock "buy," citing erosion in Morgan's prime brokerage and derivatives businesses and broader market weakness. It was a tense week for Morgan Stanley, which had secured an agreement from MUFG two weeks ago and received antitrust approval, but still had to wait five days before closing. During that period, the Securities and Exchange Commission also lifted its short-sales ban, adding pressure to Morgan's stock. MUFG delivered its 10-figure payment with a check because bank holidays in the United States and Japan precluded an electronic transfer, people familiar with the situation said. Plans Mack and other top bank CEOs were meeting with US Treasury Secretary Henry Paulson on Monday to firm up details of a financial markets stabilization plan, which may include taking equity stakes in banks. Morgan Stanley officials said the deal creates a partnership that will fortify the bank and create business opportunities worldwide in areas like asset management and corporate banking. MUFG also will bolster the market's shaken confidence in Morgan Stanley by providing letters of credit and credit lines. Last month Morgan became a bank holding company, and its links to MUFG will help it expand its deposit-gathering business. "MUFG and Morgan Stanley are working toward numerous areas of collaboration, including pursuing a lending relationship," Mack wrote. Morgan will pursue deals to expand its deposit base, he said. |
