Discussion in 'Stocks' started by mizhael, Jan 11, 2009.
Any way of evaluating the significance of the the merger of their brokeage units?
You'll never know for sure until the stocks trade, but here's some info.
By Bradley Keoun and Christine Harper
Jan. 12 (Bloomberg) -- Citigroup Inc. may book a gain of as much as $10 billion by forming a brokerage venture with Morgan Stanley, helping to replenish capital depleted by the biggest losses in the bankâs 197-year history, a person familiar with the talks said.
The pretax gain would result from writing up the value of Citigroupâs Smith Barney brokerage unit to the new price set by the deal, said the person, who declined to be identified because the talks are confidential. The gain of $5 billion to $6 billion after taxes would flow into Citigroupâs capital, a loan-loss cushion so eroded that the bank had to get $45 billion of rescue funds last year from the U.S. government.
âYouâre selling out the future to get through the crisis of the present, and unfortunately they donât have a lot of other choice,â David Trone, an analyst at Fox-Pitt Kelton Cochran Caronia Waller in New York, said in a Jan. 9 interview.
The worst banking crisis since the Great Depression forced Citigroup Chief Executive Officer Vikram Pandit to abandon his pledge not to sell Smith Barney. For the past decade, the unit has been at the center of the bankâs plan to provide bond- underwriting, savings accounts and investment advice under a single umbrella.
Citigroup spokesman Michael Hanretta declined to comment. Jim Wiggins, a spokesman for Morgan Stanley, didnât return calls seeking comment.
âMorgan Stanley Smith Barneyâ
Talks on the plan to combine Smith Barney with Morgan Stanleyâs brokerage in a $20 billion joint venture progressed over the weekend, another person briefed on the talks said. The deal may be announced as soon as mid-week, this person said.
Under the plan being considered, Morgan Stanley would pay $2 billion to $3 billion to New York-based Citigroup to obtain 51 percent of a venture that would combine both firmsâ retail brokerage arms, people familiar with the plan said.
The new firm, tentatively named Morgan Stanley Smith Barney, would have about 22,000 brokers, exceeding the network created by Bank of America Corp.âs Jan. 1 takeover of Merrill Lynch & Co., which have about 20,000 brokers between them.
To contact the reporter on this story: Bradley Keoun in New York at firstname.lastname@example.org; Christine Harper in New York at email@example.com.
4 million share market order (long) in C Friday afternoon, may offer some hints...
I've read that article too. But got no clue and couldn't evaluate the significance to both sides.
both will close down..
This shows Citi's troubles are worsening and it has to things Pandit had rejected before. However, market may respond differently.
Citi Board Backs CEO As Outlook Worsens
When did the news come out?
After market on Friday?
Is it too late to get into long C?
For MS, it should still be positive, right?
That's why I take profit of my shorts before weekends. They're laying bear traps all around. They can manipulate the chart and make it as if the wedge about to break down, then rally it up then next monday. Very sneaky
What are your forecasts about MS and Citi tomorrow?
I don't understand why MS stock dropped right after the news broke, it seems like they will benefit from this.
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