Morgan Stanley steadies its ship

The price Mitsubishi will pay for the stake has not been decided, with the due diligence process still being carried out, but experts estimate it will be in the region of $8.5billion.

There are no plans to merge the two banks and Morgan Stanley will continue to operate its European business from Canary Wharf.

In another move to safeguard its future the bank has been given permission by the US Federal Reserve to start taking deposits.

This will enable them to raise more funds by opening commercial banks, although at this early stage there is no indication that high street branches will be springing up around London.

The bank will also have access to the Federal Reserve’s funding window, designed to prevent struggling financial institutions from failing in a similar manner to Lehman Brothers.

Morgan Stanley chairman and chief executive John Mack said: “As one of the largest commercial banks in the world, Mitsubishi UFJ would be a valuable partner as we transition to a bank holding company.
“This new bank holding structure will ensure that Morgan Stanley is in the strongest possible position – with the stability and flexibility to seize opportunities in the rapidly changing
financial marketplace.
“It also offers the marketplace certainty about the strength of our financial position and our access to funding.�

Shares in Morgan Stanley, along with Goldman Sachs one of the last independent investment banks left, plummeted last week in the wake of Lehman Brothers collapse.