Those merger talks between Morgan Stanley (MS) and Wachovia (WB) have come to an end, Reuters is reporting. The negotiations fell apart after Morgan converted itself to a bank holding company and secured billions from Mitsubishi. From Reuters:
But on Sunday the second-largest Wall Street firm converted to a bank holding company structure, gaining permanent access to Federal Reserve funding and making it easier for Morgan to acquire other banks. The next day, Morgan announced plans to sell a stake of as much as 20 per cent to MUFG, Japan’s largest bank, a deal that would raise $8.5 billion and create a partnership to pursue other opportunities.
These moves made a Wachovia deal less critical, the sources said. Morgan executives are now focused on ways to expand its deposit base and banking franchise.
We suspect the fact that the Treasury Department wants to hand out hundreds of billions of dollars to financial firms also makes the need to do a balance-sheet bolstering deal a little less urgent. Reuters is too polite to its sources to mention that.
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