Morgan Stanley Overview: Morgan Stanley is a major integrated financial services firm. Its lines of business include:
- Financial Advisory Services
- Asset Management
- Investment Banking
- Securities Trading
On September 21, 2008 Morgan Stanley successfully applied to become a bank holding company. This subjects the firm to increased federal regulation and will reduce profit-making opportunities in the future. On the other hand, the move is designed to increase investor, creditor and client confidence in Morgan Stanley, largely by giving it ongoing access to emergency funding from the Federal Reserve's discount window. The financial press subsequently has been filled with unconfirmed reports that Morgan Stanley is actively seeking to acquire one or more regional banks, to add a banking deposit base to its sources of funding.
Size: Morgan Stanley reports the following figures as of November, 2011:
- Employees = Over 60,000
- Worldwide Offices = Over 1,300
- Operations in 42 Countries
Morgan Stanley Smith Barney: In 2009, Morgan Stanley and Citigroup combined their wealth management (financial advisory) services in a joint venture called Morgan Stanley Smith Barney. Follow the link for details. In September 2009, Morgan Stanley announced that it planned to exercise its option to acquire Smith Barney in its entirety from Citigroup by 2014.
Positives: Morgan Stanley is one of the most respected old-line names in investment banking. It became an integrated financial services firm by merging with Dean Witter in 1997, which added financial advisory services (securities brokerage) and asset management capabilities.
Despite taking large mortgage-related writedowns late in 2007, Morgan Stanley finished the year profitable overall, and continues profitable through the first half of its fiscal 2008. Total employment is down a modest 1,866 (3.9%) from the end of fiscal 2007. The number of financial advisors is down only 79, or 0.9%.
Morgan Stanley's financial viability was solidified on October 13-14, 2008 with a $9 billion equity investment from Japan's Mitsubishi UFJ Financial Group (MUFG), giving the latter a potential 20% stake in Morgan Stanley. This was followed, on June 30, 2009, with the announcement of a joint venture between Morgan Stanley and MUFG to expand their corporate lending presence in the Americas. MUFG will add a $70 billion loan portfolio to Morgan Stanley's $30 billion pool.
A $10 billion equity investment from the Treasury Department, pursuant to the $700 billion TARP plan, was repaid by Morgan Stanley in June 2009. This frees Morgan Stanley from the potentially onerous federal oversight that some of its rivals must endure as a result of staying in the program.
Negatives: The merger of Morgan Stanley and Dean Witter was a difficult melding of disparate corporate cultures, and still does not seem to be fully resolved. Curiously, the financial reports give headcount figures for "global representatives" rather than "financial advisors" and fail to explain the difference in terminology.
Morgan Stanley Smith Barney has experienced a net decline of 644 financial advisors since the launch of this joint venture in 2009 (source: "Wall Street Wielding the Ax," The Wall Street Journal, 6/29/2011)). This indicates that overall employment in this major business unit is on a downward trend. Additionally, Morgan Stanley as a whole is committed to reducing expenses by $1 billion a year through 2014, which inevitably translates into significant staff and compensation cuts.
On December 15, 2011, Morgan Stanley announced that 1,600 positions would be eliminated globally in 1Q 2012, cutting across virtually all divisions and management levels.
