Wall Street

Morgan Stanley agreed to purchase E * Trade

Summary

Morgan Stanley Buys E*Trade for $13 Billion Description video: Feb.20 — Morgan Stanley agreed to buy E*Trade Financial Corp. for $13 billion, adding the retail brokerage to its Wall Street powerhouse and continuing the industry’s consolidation. Bloomberg’s Sonali Basak has more […]

Morgan Stanley Buys E*Trade for $13 Billion

Description video:
Feb.20 — Morgan Stanley agreed to buy E*Trade Financial Corp. for $13 billion, adding the retail brokerage to its Wall Street powerhouse and continuing the industry’s consolidation. Bloomberg’s Sonali Basak has more on \”Bloomberg Daybreak: Americas.\”

Morgan Stanley agreed to purchase E * Trade

Morgan Stanley will acquire E * Trade Financial Corp for $ 13 billion. Investbank will pay 58.74 dollars for each share of the company. Against the backdrop of this news, Morgan Stanley shares slipped more than 4%. At the same time, E * Trade shares soared 23%.

«The deal with E * Trade will provide us with a great opportunity to increase growth our asset management business», – said James Gorman, chairman and CEO of Morgan Stanley. 

«In addition, it is in line with our strategy of moving to a lighter business balance, focusing on more reliable sources of income.», – he added.

Morgan Stanley agreed to purchase E * Trade

The completion of the transaction is expected in the fourth quarter of 2020. Recall that last year Charles Schwab acquired TD Ameritrade for $ 26 billion. Then analysts immediately suggested that E * Trade could also be very interested in finding a partner, as the brokerage industry faces growing pressure from trading with zero commission.. After Schwab became the first major player to cut online commissions last October, competitors were forced to follow suit..

E * Trade is an attractive target for an investment bank that relies on consumer finance due to its very strong base deposits, which annually generates about 56 billion dollars in accounts. The custodian business will provide significant funding advantages for Morgan Stanley, the bank says.

E * Trade has 5.2 million client accounts and over $ 360 billion in retail client assets.

E * Trade CEO Mike Pizzi will continue to manage business and integration within the Morgan Stanley franchise following the deal.

The agreement is likely to put pressure on smaller brokers such as Interactive Brokers as well as startup Robinhood, which began free trading in 2013.