Mitsubishi UFJ Financial Group and Morgan Stanley have decided to revise their initial plans to form a new securities firm by merging their brokerage units in Japan, reported The Wall Street Journal citing people familiar with the matter.
Reportedly, in March this year the banks announced that they would merge their respective securities units in Japan, with Morgan Stanley taking 40% stake and MUFG holding 60%. The deal was part of their alliance, after the Japan-based bank pumped $9 billion to buy 20% in the US-based bank during the height of global financial turmoil.
The deal bolstered Morgan Stanley’s battered finances and allowed MUFG to expand its global reach. However, Morgan Stanley’s fortunes have improved dramatically since then.
The changes to the earlier plan is said to be due to regulatory concerns in their respective nations as to which of the two banks will take on risks related to the joint venture’s trading book.
As per the revised plans, Morgan Stanley will keep some operations, including stock dealing for corporate clients. Due to the revision, the merger will be delayed by about two months, to May 2010, reported the newspaper.
The plan is subject to the approval of Japan’s Financial Services Agency and the U.S. Securities and Exchange Commission.
