Morgan Stanley weighing merger option?

17 September 2008

Mumbai: Morgan Stanley, the No 2 US investment bank, is weighing options for merger with a commercial bank, according to CNBC, even as the Financial Times said the global financial services major would rather remain independent despite the current market turbulence.

Morgan Stanley and its peer Goldman Sachs believe they have the financial strength to survive as stand-alone investment banks and are not interested in pairing with a commercial bank, the FT report said.   

''In the wake of the collapse of Lehman Brothers and the sale of Merrill Lynch to Bank of America at the weekend, the two Wall Street firms maintained that they could survive as independents without linking up with a commercial bank to gain access to broader sources of funding,'' the report said.   

The CNBC report said the Morgan Stanley officials were not in merger talks as of late Tuesday, adding, that senior Morgan officials have conceded that further volatility in the company's stock price could force the company to change course.

Morgan Stanley is working with a group of global commercial and investment banks that included Bank of America, Barclays, Citibank, Credit Suisse, Deutsche Bank, Goldman Sachs, JP Morgan, Merrill Lynch, and UBS, to  help enhance liquidity and mitigate the unprecedented volatility in global equity and debt markets. 

Morgan Stanley shares ended 10.8 per cent down at $28.70 on Tuesday, having fallen 46 per cent so far this year.