Thursday, February 20, 2020

Morgan Stanley to Buy E-Trade for $13 Billion

From Seth Mandel, at Foreign Affairs, "Blue Chip Morgan Stanley to Buy Discount Broker E-Trade":

Morgan Stanley announced on Thursday that it would buy E-Trade, the online discount brokerage, for about $13 billion, in the biggest takeover by a major American lender since the 2008 global financial crisis.

The deal would give Morgan Stanley — long one of Wall Street’s blue-chip names, whose asset management business caters to the wealthy — a big share of the market for online trading, an additional 5.2 million customer accounts and $360 billion in assets.

The deal highlights the increasing convergence of Wall Street and Main Street: Elite bastions of corporate finance are increasingly seeking to cater to customers with smaller pocketbooks, and online brokerages that once hoped to overthrow traditional trading houses are instead suffering from a price war that has slashed their profits.

It also reflects Morgan Stanley’s strategy of focusing on asset management rather than investment banking and high-stakes trading, betting on steady fees over bigger paydays and bigger risks.

Under James P. Gorman, Morgan Stanley’s chief executive for a decade, the firm has increasingly de-emphasized jet-setting mergers bankers and aggressive bond trading, preferring the predictable and less costly business of wealth management.

Before Thursday, Mr. Gorman’s most transformative deal at Morgan Stanley was its acquisition of Smith Barney’s retail brokerage in 2012...