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Morgan Stanley to Buy Stake in Mitsubishi

MS MTU CS BAC

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According to Bloomberg, Morgan Stanley (MS - Analyst Report) is set to acquire a 30% stake in Mitsubishi UFJ Financial Group, Inc. (MTU - Analyst Report) wealth-management business in Japan. The deal will expectedly be complete early next year.

On closure of the deal, Mitsubishi UFJ will continue to run the business, while Morgan Stanley will be able to offer a wide range of research and investment products to the Japanese clientele. Mitsubishi’s wealth-management unit in Japan caters to wealthy clients and is an attractive acquisition for Morgan Stanley.
 
With Asia emerging as a lucrative business market for foreign companies, Morgan Stanley is keen to tap the growth opportunities of the Japanese economy. Earlier, in 2010, Morgan Stanley and Mitsubishi had set up two investment-banking ventures in Japan.

Mitsubishi’s wealth-management business was previously a joint venture (JV) between Mitsubishi UFJ and Bank of America’s (BAC - Analyst Report) Merrill Lynch brokerage unit. However, in Dec 2012, Mitsubishi purchased the remaining 49% stake in the JV.

The latest deal by Morgan Stanley strengthens its ties with Mitsubishi. Mitsubishi UFJ, which presently owns about 22% stake in Morgan Stanley, had invested $9 billion in the U.S. bank at the time of the 2008 economic crisis.

In the backdrop of a tepid economic recovery in the U.S coupled with stringent regulations and the eurozone crisis, Asia has been attracting corporate companies. Fast growth, increased inflow of funds and investment in infrastructure to drive growth in the emerging economies of Asia favorably position these markets.

Among other global banks, Credit Suisse Group AG (CS - Snapshot Report) has also exploited the booming economy in Japan by acquiring HSBC Holdings Plc’s Japanese private banking unit and Standard Chartered Plc’s wealth-management business.

Morgan Stanley currently carries a Zacks Rank #3 (Hold).

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