Joint venture creates leader in wealth
(16 January 2009 – USA) A joint venture between two big American banks, Morgan Stanley and Citigroup will create the largest wealth manager in the world.
The agreement will combine Morgan Stanley's Global Wealth Management Group and Citi's Smith Barney, Quilter in the UK, and Smith Barney Australia into a new joint venture to be called Morgan Stanley Smith Barney.
The combined firm will have more than 20,000 financial advisors and US$1.7 trillion in client assets.
In Australia, Smith Barney's 200 financial advisers, with a range blue-chip corporate clients, will move to Morgan Stanley.
Under the terms of the agreement, Citi will exchange 100 percent of its Smith Barney, Smith Barney Australia and Quilter units for a 49 percent stake in the joint venture and an upfront cash payment of US$2.7 billion.
Morgan Stanley will exchange 100 percent of its Global Wealth Management business for a 51 percent stake in the joint venture.
Morgan Stanley Co-President, Australian-born James Gorman, who has previously led Merrill Lynch's Global Private Client Group, will serve as chairman of the new company. Gorman will continue to serve as Co-President of Morgan Stanley.
Charles Johnston, who has 30 years of experience in wealth management, most recently as President of Citi's Global Wealth Management business in the U.S. and Canada, will serve as president.
The joint venture is expected to achieve cost savings of approximately $1.1 billion or approximately 15 percent of the combined firm's estimated expense base.
This will be done by rationalising and consolidating key functions including technology, operations, sales support, product development and marketing.
The combined firm will have more than 20,000 financial advisors and US$1.7 trillion in client assets.
In Australia, Smith Barney's 200 financial advisers, with a range blue-chip corporate clients, will move to Morgan Stanley.
Under the terms of the agreement, Citi will exchange 100 percent of its Smith Barney, Smith Barney Australia and Quilter units for a 49 percent stake in the joint venture and an upfront cash payment of US$2.7 billion.
Morgan Stanley will exchange 100 percent of its Global Wealth Management business for a 51 percent stake in the joint venture.
Morgan Stanley Co-President, Australian-born James Gorman, who has previously led Merrill Lynch's Global Private Client Group, will serve as chairman of the new company. Gorman will continue to serve as Co-President of Morgan Stanley.
Charles Johnston, who has 30 years of experience in wealth management, most recently as President of Citi's Global Wealth Management business in the U.S. and Canada, will serve as president.
The joint venture is expected to achieve cost savings of approximately $1.1 billion or approximately 15 percent of the combined firm's estimated expense base.
This will be done by rationalising and consolidating key functions including technology, operations, sales support, product development and marketing.
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