The bank plans to keep its eyes open for smaller mergers that could help build its asset management unit, said CFO Jon Pruzan at an investor conference on Thursday (Feb. 27). Wealth management deals are off the table for now, though, he noted, while Morgan Stanley finishes the $13 billion acquisition of E-Trade.
Morgan Stanley would ideally be looking for companies that could add products or new regions for its investment management unit. The company isn’t looking for more investments in its investment banking and trading division, Pruzan said.
The deal for E-Trade had analysts speculating whether Morgan Stanley could engage in the kinds of large-scale takeovers that could reshape the landscape of the U.S. financial industry. JPMorgan Chase said this week that it will “aggressively” go after mergers, but Goldman Sachs CEO David Solomon said his firm doesn’t need to pursue acquisitions just because its close rival did.
In the deal to acquire E-Trade, Morgan Stanley agreed to pay $58.74 per share, and the agreement would consolidate $3.1 trillion in client assets. Morgan Stanley had its eye on E-Trade because of the latter company’s ability to generate around $56 billion per year in deposits. The acquisition will help the bank in the area of deposits, where it has struggled over the last several years.
The deal was a point of speculation among experts because of Charles Schwab’s acquisition of TD Ameritrade for $26 billion in stock, with many correctly guessing that E-Trade would be next up for a trade.
However, Morgan Stanley’s buy of the eTrading platform was the biggest deal by a major Wall Street bank since before the financial crisis of 2008. There was some talk of antitrust issues ending the deal with E-Trade, in which case Morgan Stanley would’ve gotten a $375 million breakup fee.
