Is Morgan Stanley on the market now?
TEXT OF STORY
Scott Jagow: No bank wants to be the next Lehman Brothers. That’s why there seems to be a 24-seven push to make deals. Today, the British bank Lloyds TSB bought a troubled mortgage company called HBOS. And there’s talk Washington Mutual wants a buyer. And that the investment bank Morgan Stanley might be on the market. Morgan Stanley’s stock had its worst day in 15 years yesterday because the rumors are flying. Jeremy Hobson reports from New York.
Jeremy Hobson: The speculation focuses on a merger, possibly with Wachovia. Morgan Stanley is not commenting beyond saying it’s trying to deal with the rapid drop in its share price. But Charles Peabody of Portales Partners says merging with a commercial bank would make sense.
Charles Peabody: Big investment banks are funded by institutional money, which is probably a little more sophisticated, flighty money. The commercial bank has a very stable core consumer deposit base that doesn’t move as quickly.
And, of course, a merger would be better than a failure. But Peabody says in this case, a commercial bank like Wachovia could benefit as well.
Peabody: In many respects, you could view this merger as a capital-raising event at a time when neither of these companies could raise capital independently.
If Morgan Stanley does merge, Goldman Sachs would be the only independent investment bank left compared to five at the beginning of the year.
In New York, I’m Jeremy Hobson for Marketplace.
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