Morgan Stanley, the tony investment bank for rich Americans and corporations, is making a play for the masses.
The move, announced early Thursday, is CEO James Gorman's move to double-down on his all-in bet on the U.S. wealth management industry. The New York-based bank is getting E-Trade's 5.2 million customer accounts with $360 billion in assets and a leading business managing corporate stock plans.
Morgan Stanley "will look to couple their advisor-driven model with ETFC's direct-to-consumer and digital capabilities," said Richard Repetto of Piper Sandler in a note. "As a result this will widen, while potentially enhancing, MS' current offerings." That will lower its funding costs by about $150 million, on top of the $400 million in other savings Morgan Stanley says the deal will lead to.
And the deal, the biggest takeover by a U.S. bank since the financial crisis, also gives Morgan Stanley a business that has been squeezed by the race to zero among discount brokers.
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