The great brokerage joint venture between Morgan Stanley and Citigroup will be delayed due to tech issues, the Financial Times reports. The complexity of merging the information technology systems will mean that the firms will have to wait up to two years to gain the full benefits of their brokerage joint venture.
The IT issues will make it difficult for financial advisers who want to sell products from both firms. This expanded array of capital markets product options was supposed to be one of the benefits the 18,5000 financial advisers could offer their clients.
From The FT:
But the difficulties of integrating IT systems will mean that Morgan Stanley’s financial advisers will not be able to access products from Citi’s capital markets business, and vice-versa, for months. People close to the venture – which is called Morgan Stanley Smith Barney – said the internal timetable was to provide brokers with a large number of capital markets products from both firms by the end of the year, with a full integration within two years.
Until then, when Citi’s bankers arrange a bond issue, they will only be able to sell it through the 10,500 Smith Barney brokers. The same applies to Morgan Stanley, which has 8,000 financial advisers.
The retail brokerage joint venture, which is being called Morgan Stanley Smith Barney, is actually already up and running. It is majority owned by Morgan Stanley, which paid $2.75 billion to Citigroup as part of the deal. the joint venture is expected to earn $14 billion this year.
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