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Morgan Stanley to Divest GSPS Biz

MS ING

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Morgan Stanley (MS - Analyst Report) is divesting a section of its global stock plan services (GSPS) business based in Europe, Middle East and Asia (EMEA) region to Computershare Limited. The deal is likely to be concluded in the second quarter of this year.

The EMEA division of the GSPS business mainly provides employee stock plan record-keeping and automated trade execution services to some of the top companies in the United Kingdom and Europe. These companies are listed on at least 13 exchanges worldwide.

Morgan Stanley will carry on providing trade execution services to the current GSPS EMEA clientele and their employees.

The divestment is part of Morgan Stanley’s efforts to concentrate solely on the stock plan offerings of the U.S. companies. Morgan Stanley is looking forward to make considerable investment in the U.S. business to support its corporate clientele and their employees across the globe.

Moreover, the GSPS EMEA business and clientele will benefit from the size and expertise of Computershare – one of the leading companies in the stock plan services arena.

Concurrent with this development, Reuters reported that London-based Standard Chartered PLC is in talks with Morgan Stanley to buy its India wealth management unit. In Nov 2012, the company had initiated strategic review of its Indian private wealth management division. The review was a part of the company’s global strategy to do away with its underperforming wealth management operations.

Presently, Morgan Stanley is not the only company shedding non-core operations. Netherlands-based ING Groep NV (ING - Snapshot Report) and British bank HSBC Holdings Plc. are also reshuffling operations by offloading non-core assets.

We believe that Morgan Stanley’s strategy to offload the non-core operations will go a long way in streamlining its operations. Moreover, the Federal Reserve’s new proposed financial regulations, which require banks to maintain a robust liquidity, are prompting banks to improve capital positions. Thus, selling off unprofitable units and focusing on core business is becoming the need of the hour.

Currently, Morgan Stanley retains a Zacks Rank #3 (Hold).

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