Morgan Stanley, owner of the world’s biggest brokerage, will buy the remaining 35% of its wealth-management venture with Citigroup after winning Federal Reserve approval in the regulator’s annual stress test.
Morgan Stanley would have a 5.62% Tier 1 common ratio in the most adverse economic scenario even after buying the stake, above the 5% minimum, the Fed said.
CEO James Gorman, 54, already has set a price with Citigroup to purchase the rest of the brokerage venture, which was created in 2009. Morgan Stanley said in January that it will pay $4.7bn for the last piece, which will place demands on an additional $400m of capital.
'The Federal Reserve’s non-objection to our capital plan is another important step towards full ownership of our wealth-management business, which has been one of the Firm’s key strategic priorities since 2009', Gorman said in a statement. 'We look forward to completing the acquisition of the remaining 35% stake in our wealth-management joint venture'.
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