Saturday October 4, 02:56 AM
Morgan Stanley may scale back prime-brokerage operation: report
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Morgan Stanley is looking at scaling back its prime-brokerage operation, selling assets or buying a faltering regional bank, the New York Post said citing sources. The firm may also try to work out a way to piggyback on to the $1.3 trillion deposit base of Japan's Mitsubishi UFJ Financial Group , the paper said citing people familiar with the matter. Mitsubishi UFJ took a 21% stake in Morgan Stanley for $9 billion earlier this week. The firm is also eyeing trimming its balance sheet and exiting, or scaling back, from businesses that don't provide high returns, like prime-brokerage, trading of corporate bonds and high-yield debt, the paper added. Details of Morgan Stanley's plans are still fluid the paper said adding that Morgan Stanley refused to comment. Morgan Stanley could not be immediately reached for comment by Reuters. Morgan Stanley's move to scale back its prime-brokerage shop, which caters to hedge funds, follows massive outflows in recent weeks that have led the firm to lose more than one-third of its hedge-fund clients, the paper said. Morgan Stanley and Goldman Sachs late in September set aside their investment banking models to become bank holding companies, accepting tighter regulation under the Federal Reserve in return for greater access to central bank funds. —Reuters
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