Morgan Stanley To Spin Off $4 Billion Trust Business - Report

Eliane Chavagnon

29 April 2013

Morgan Stanley is in talks to sell its trust business to Japan’s Mitsubishi UFJ Financial Group, Bloomberg reported, citing individuals with knowledge of the matter.

The talks relate to a unit which provides trust services for $4 billion of client assets within Morgan Stanley’s wealth management division, according to an individual, the report said today. No details on the value of the transaction were given in the report.

The unit offers fiduciary and administrative services to wealthy clients who want to set up personal trusts and is part of Morgan Stanley Private Bank, which is led by Shelley O’Connor.

It would be bought by Mitsubishi UFJ's San Francisco, CA-based arm, UnionBanCal Corp, which already offers trust services, the sources said. However, the assets will still be managed by Morgan Stanley advisors.

Bloomberg said negotiations were reported yesterday by Nikkei newspaper and added that the transaction remains subject to US regulatory approval.

Morgan Stanley had not responded to a request from this publication for comment in time for publication.

Background

Morgan Stanley chief executive James Gorman reportedly visited Tokyo this month to meet with Mitsubishi UFJ. He has previously sold smaller units of the brokerage division - which has $1.79 trillion in client assets - as he "seeks to cut costs and boost returns," the report said.

The deal is one example of how many global banks have been reviewing their activities and in turn spinning off unprofitable units. In a similar move last December, Bank of America spun off its Japanese joint private banking venture, selling its 49 per cent stake to its partner Mitsubishi UFJ. BoA Merrill Lynch will now focus on global markets, corporate and investment banking in Japan. The move followed other global restructuring at the firm such as the sale of its non-US wealth business in the previous August.

Mitsubishi UFJ is Morgan Stanley’s biggest shareholder and partner in two investment banking joint ventures; the Japanese bank owns a 22 per cent stake in Morgan Stanley, according to data compiled by Bloomberg.