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Japanese come to rescue of Morgan Stanley
Jonathan Prynn, Consumer Affairs Editor22 Sep 2008
Humbled investment bank Morgan Stanley is selling up to 20 per cent of its shares to a Japanese bank to help secure its future.
The Wall Street giant, which saw its shares plummet last week during the global financial meltdown, has teamed up with Japan's Mitsubishi UFJ Financial Group. It is the latest move by Morgan Stanley to persuade investors that it is strengthening its finances after the collapse of rival Lehman Brothers.
Last night Morgan Stanley, which has its European headquarters in Canary Wharf, received permission from the US Federal Reserve to start taking deposits like a "normal" bank.
Goldman Sachs, the only other independent US investment bank left standing, made the same move, which will allow the banks to raise more funds.
Morgan Stanley chairman and chief executive John Mack said: "As one of the largest commercial banks in the world, Mitsubishi UFJ would be a valuable partner as we transition to a bank holding company."
The stock Market held its nerve today as a calmer City tried to move on from last week's unprecedented gyrations in the financial markets. Although the FTSE-100 failed to follow the lead of Asian markets and slipped 21.6 at 5289.6 by the end of the day's trading, there was none of the panic of last week.
It follows the record eight per cent rise on Friday in the wake of the US government's plan to soak up $700billion worth of "toxic" mortgage debts held by banks.
Halifax owner HBOS, which was forced into a £12.2billion rescue takeover by Lloyds TSB at the height of the turmoil, saw its shares fall 9p to 213.5p.
Shares in Bradford & Bingley, seen as the weakest remaining independent British bank, were up 2.25p, or 8 per cent at 30p on reports that the Financial Services Authority is drawing up contingency plans if its shares slide alarmingly again.
There was new hope for hundreds of workers at collapsed Lehman Brothers in London with reports that bidders, including Barclays and Japanese bank Nomura, are interested in snapping up parts of the Canary Wharf-based investment bank.
PricewaterhouseCoopers, the administrators of Lehmans in London, are demanding the return of $8 billion transferred to New York on the Friday before the bank's collapse a week ago.
Despite the continuing "clear-up" after last week's extraordinary financial hurricane, there was bad news from the real economy. Property website Rightmove reported that asking prices for homes fell one per cent this month.
Ray Boulger of mortgage brokers John Charcol warned that fixed rate mortgage rates could jump by as much as 0.25 per cent this week in a reaction to the fall of Lehmans and the near disasters at HBOS and insurance group AIG.
In overnight trading in Asia, Tokyo's Nikkei 225 rose 169.73 points, or 1.4 per cent, to 12,090.59. The Hang Seng in Hong Kong was up 130.13 points to 19457.86.
