Sunday, January 11, 2009

Morgan Stanley to pay $2 billion for Smith Barney

Citigroup, which is under tremendous pressure from the U.S. government to shore up its balance sheet after taking $45 billion of government capital in October and November, they said.

The bank is considering multiple options in addition to the Morgan Stanley deal.

"Everything is on the table," one of the people familiar with the matter said, adding that the bank may put its toxic assets into a separate unit as a preliminary step toward shedding them.

Terms of the Morgan Stanley deal are still being worked out. Under the current plan, Citigroup and Morgan Stanley would set up a joint venture for their combined retail brokerage businesses. Morgan Stanley would own 51 percent, control the venture, and expect to buy Citigroup's remaining share over the next five years.

Reuters: Morgan Stanley to pay $2 to $3 billion for controlling interest in Citigroup's Smith Barney

Economist: Jan. 12 Update