Early Thursday, Morgan Stanley said it plans to buy a 14% stake in Morgan Stanley Smith Barney, which was created out of a merger between Citi and Morgan's wealth management units. Morgan Stanley already owns 51% of the business and the new purchase will raise that to 65%.
The two firms will agree to a price by Sept. 1.
Morgan Stanley has the option to buy the rest of the unit, which comes with roughly 17,200 financial advisers, over the next two years. It's also a business that's considered a source of relative calm, compared with Morgan Stanley's more volatile trading and investment banking units.
Morgan Stanley's stock has had a rough year, falling nearly 14% from January, while Citi has fared much better, with its stock just 1.2% lower.
Both banks have had their public images further bruised this year, but Morgan Stanley has taken the spotlight in the past few weeks.
Questions and finger pointing surrounding Morgan Stanley's underwriting of Facebook's (FB) IPO have taken center stage, and perhaps given Citi's executives and board a few minutes to catch their breath. Citi's shareholders rejected CEO Vikram Pandit's $15 million pay package in mid-April and are still waiting to hear back from the board on what it plans to do next.
Not a member yet?Sign up now for a free account
|Kate and William can afford 3 kids. Many Brits cannot|
|Korean Air ousts 'nut rage' heiress and her sister|
|Walmart's CEO earns 1,188 times as much as the company's median worker|
|Google's profit soars amid data privacy concerns|
|Report: Sean Hannity received HUD help on multimillion dollar property deals|