<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0><TBODY><TR>Morgan Stanley struggles for survival
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The Dow Jones ticker at New York's Times Square displaying grim news about embattled Morgan Stanley on Friday. -- PHOTO: BLOOMBERG
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<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->New York - Morgan Stanley was racing to secure a financial lifeline from a big Japanese bank over the weekend as confidence in the embattled Wall Street bank continued to erode.
Investors have begun to question whether Japanese bank, Mitsubishi UFJ Financial Group, will go through with its US$9 billion (S$13.4 billion) investment or, if it does, whether that will be enough to safeguard Morgan Stanley. Both sides insist the deal will close on Tuesday.
But some investors have begun to float several other options for Morgan Stanley, the once-proud offshoot of the Morgan banking empire.
Some suggest Mitsubishi might buy the entire firm. Others say Morgan Stanley could seek a merger with a bank in the United States. Yet others say the federal government may buy into the besieged firm.
The growing concern over the fate of Morgan Stanley was evident in the stock market on Friday. Shares of the bank fell 22 per cent, or US$2.77, to US$9.68, less than half its value at the beginning of the week.
The decline left the shares down nearly 82 per cent this year.
Already, Mitsubishi is considering adding a credit facility to the deal that Morgan Stanley could draw on if trouble hits, according to a Morgan Stanley executive.
Citigroup and JPMorgan Chase declined to comment on Friday about whether they might consider a merger with Morgan Stanley.
For the US authorities watching from the sidelines as Morgan Stanley struggles with doubts about its survival, letting the investment bank fail is not really an option after the shockwaves created by the decision not to rescue Lehman Brothers, analysts say.
'You can't possibly allow Morgan Stanley to go. The unrelenting pessimism and absence of confidence that we've seen for the last two weeks would get worse,' said Mr Michael Holland, who oversees more than US$4 billion of assets at Holland & Co in New York.
If Morgan Stanley fails, billions of dollars of prime brokerage client assets will be tied up for months, hobbling a huge swathe of the world's hedge funds, a fund manager said.
But it is also becoming clear throughout the credit crisis that seemingly stable financial firms can collapse quickly.
'As we've seen with Bear Stearns and Lehman, once the fear virus has infected the story, it is tough to shake,' said Mr David Trone, an analyst with Fox-Pitt Kelton Cochran Caronia Waller, in a research note. New York Times, Reuters
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The Dow Jones ticker at New York's Times Square displaying grim news about embattled Morgan Stanley on Friday. -- PHOTO: BLOOMBERG
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<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->New York - Morgan Stanley was racing to secure a financial lifeline from a big Japanese bank over the weekend as confidence in the embattled Wall Street bank continued to erode.
Investors have begun to question whether Japanese bank, Mitsubishi UFJ Financial Group, will go through with its US$9 billion (S$13.4 billion) investment or, if it does, whether that will be enough to safeguard Morgan Stanley. Both sides insist the deal will close on Tuesday.
But some investors have begun to float several other options for Morgan Stanley, the once-proud offshoot of the Morgan banking empire.
Some suggest Mitsubishi might buy the entire firm. Others say Morgan Stanley could seek a merger with a bank in the United States. Yet others say the federal government may buy into the besieged firm.
The growing concern over the fate of Morgan Stanley was evident in the stock market on Friday. Shares of the bank fell 22 per cent, or US$2.77, to US$9.68, less than half its value at the beginning of the week.
The decline left the shares down nearly 82 per cent this year.
Already, Mitsubishi is considering adding a credit facility to the deal that Morgan Stanley could draw on if trouble hits, according to a Morgan Stanley executive.
Citigroup and JPMorgan Chase declined to comment on Friday about whether they might consider a merger with Morgan Stanley.
For the US authorities watching from the sidelines as Morgan Stanley struggles with doubts about its survival, letting the investment bank fail is not really an option after the shockwaves created by the decision not to rescue Lehman Brothers, analysts say.
'You can't possibly allow Morgan Stanley to go. The unrelenting pessimism and absence of confidence that we've seen for the last two weeks would get worse,' said Mr Michael Holland, who oversees more than US$4 billion of assets at Holland & Co in New York.
If Morgan Stanley fails, billions of dollars of prime brokerage client assets will be tied up for months, hobbling a huge swathe of the world's hedge funds, a fund manager said.
But it is also becoming clear throughout the credit crisis that seemingly stable financial firms can collapse quickly.
'As we've seen with Bear Stearns and Lehman, once the fear virus has infected the story, it is tough to shake,' said Mr David Trone, an analyst with Fox-Pitt Kelton Cochran Caronia Waller, in a research note. New York Times, Reuters
