Mitsubishi UFJ Financial Group (MUFG), Japan’s largest financial group, has bought a 21% stake in Wall Street bank Morgan Stanley for $9-billion, the companies said on Monday.
The investment was part of a previously announced global strategic alliance between Morgan Stanley and MUFG, the world’s second-largest bank holding company with $1,1-trillion in bank deposits.
Under the deal, Mitsubishi has acquired preferred shares paying a 10% dividend
“The MUFG investment further bolsters Morgan Stanley’s already strong capital position,” the companies said.
Shares of Morgan Stanley, one of only two independent investment banks left on Wall Street, fell sharply last week, raising speculation that Mitsubishi might pull out of the deal and making Morgan Stanley a candidate for a recapitalisation from the United States government, analysts said.
For investors, the pressure on Morgan Stanley stems from uncertainty about its exposure to losses, particularly complicated securities called credit default swaps that insure buyers against default.
The deal received a green light from US federal authorities a week ago and could be concluded on Tuesday after a mandatory legal delay. — AFP