Morgan Stanley Gets Call from Wachovia Expressing Interest: NYT

[sabra]

Source: CNBC

BREAKING NEWS: Morgan Stanley Gets Call from Wachovia Expressing Interest: NYT (Story to Come)

Read more: http://www.cnbc.com/

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http://www.cnbc.com/id/26761362

Morgan Stanley, one of the two last major American investment banks, is considering a merger with the Wachovia Corporation or another bank, according to people briefed on the discussions.

Morgan Stanley's chief executive, John J. Mack, received a telephone call on Wednesday from Wachovia expressing interest in the Wall Street bank. Morgan Stanley is considering other options as well. Other banks have also expressed interest in Morgan Stanley.

The talks are preliminary and no deal may emerge.

[aquart]

1. Morgan Stanley?

Jesus.

[Robbien]

9. A possible reason. Big hedge funds pulled their money from Morgan

A series of large hedge funds switched money out of Morgan Stanley’s prime brokerage or are considering moving after the cost of insuring the investment bank’s bonds against default soared and Lehman Brothers collapsed.

Many hedge fund managers said they were reassessing the risk of doing business with Morgan Stanley and, to a much lesser extent, Goldman Sachs after the failure of Lehman and agreed takeover of Merrill Lynch left only two large US broker-dealers.

The moves come amid widespread concerns at hedge funds and banks about renewed risks of failure of a market counterparty as a result of the US decision to allow Lehman to fail.

Morgan Stanley’s lucrative prime brokerage division, the world’s largest, lost low single-digit percentages of balances on Monday and Tuesday, according to people familiar with the business. Rivals say many funds are putting legal agreements in place to allow more to shift, and both funds and competitors said the move of cash balances accelerated on Wednesday, with one estimating there was over $20bn (£11bn) left.

The reviews by hedge funds follow the leap in the cost of Morgan Stanley credit default swaps, a form of insurance against default, in the past three days.

The cost of protecting its debt, equivalent to about 1,000 basis points, is now far higher than that of Bear Stearns immediately before its rescue, while its shares were down 32 per cent in early afternoon trading.

http://www.ft.com/cms/s/0/ff2787fe-84ee-11dd-b148-0000779fd18c.html

The rest of the article is worth reading.

[Neshanic]

Wachovia to Morgan Stanley..."Did I ever tell you that you have the most fabulous eyes!"

[crispini]

3. LOL. nt

[Zynx]

2. Wachovia? Seriously? That place is so fucked up. That would be a shit sandwich of a merger.

[anarch]

4. I'd say we all have a great many shit sandwiches ahead of us.

And you'll be grateful and happy to eat your shit sandwich, because you know some people don't even get a shit sandwich to eat.

[PassingFair]

5. Changing....rearranging.....

[RedEarth]

6. Wachovia stocks battered

Wachovia was among the financial institutions to have their stocks hit hard Wednesday as the Dow dived despite the government bailout of insurer American International Group.

Wachovia shares were trading down 18 percent Wednesday afternoon at $9.45 per share. The Dow Jones Industrial Average was down 3 percent.

Wednesday was another stumble for Wachovia stock in a week that has seen Wachovia shares fall 25 percent Monday and increase 7 percent Tuesday. Investors are worried about Wachovia’s exposure to bad mortgage loans, many of which it took on with its $25 billion takeover of Golden West Financial Corp. in 2006.

http://www.bizjournals.com/stlouis/stories/2008/09/15/daily56.html

[jazzjunkysue]

21. I took out a Wachovia mortgage last year and they told me they don't do bad credit loans.

Mine was all by the book, full report, cough up the paycheck. Looked serious to me.

My previous one to Countrywide was more or less on my autograph and credit report, and nothing else.
And they were the first to fall.

[Jacobin]

7. Morgan Stanely is expecting to get hammered

They were getting shorted like a MoFo and they are looking to get blended in with another company before they get Lehmaned

[Roland99]

8. There will soon be no more independent brokerages.

[Scooter24]

12. I truly think Goldman Sachs

will tough this one out. They are still turning a profit, albeit a small one. I think in the end, they will be the sole investment brokerage left in the US.

[galileoreloaded]

10. conglomerated counterparty risk makes a fed bailout certain. see how easy that was.....

n/t

[alfrankenaynrand]

11. lose lose situation

We are witnessing a sea change in the financial markets. This U.S. cold could become a world flu epidemic. Don't wish for a bad economy to punish the Republicans (even though they deserve it) but pray for things to stabilize. If it all goes in the toilet, it won't matter what your political preference is, we will all be selling apples to each other. Let the weak companies merge with the stronger companies. We don't want to see corporations start failing like they did in 1929. The Republican will get the blame they deserve for this mess. Let's just not try to make it look worse than it is. A crisis of confidence is contagious. And it can kill.

[amandabeech]

13. It looks like a bad start of the trading day in Asia.

New Zealand opened at 7:00 EDT and is now down 2.95%, as per Yahoo finance.

It should be an interesting evening.

Last night I had a hard time going to sleep, and woke up at 4:00 to news of the Lloyds/HBOS merger.

[democrat2thecore]

14. Latest from CNBC: Morgan Stanley may turn to *Chinese* Bank! -nt

[amandabeech]

15. GACK!!!

It's getting serious. David Faber has his suit jacket on.

I don't know if the Chinese would want to do this. I certainly hope that they don't. I don't want something like Goldman to be held by a country that is not entirely friendly to us and could give us problems on Taiwan.

China and Goldman could be something that awakens the populace like Dubai and the ports.

[KamaAina]

20. (gulp) A dear friend (and diehard Dem) works for Morgan Stanley

She may actually be to the left of me, even. Outside DU, that's almost impossible!

She is also a dyed-in-the-wool New Yorker who would probably rather date me (over ten years her senior, balding, overweight, and worst of all, living in the Hawai'i she left in the dust after high school!) than accept a transfer to Wachovia in NC. :scared:

Um, maybe the cabaret show she's working on (a true Renaissance woman, she) will be a smash...

[Lone_Star_Dem]

16. kick to combine

[Mesteryo]

17. Morgan Stanley scrambles to find buyer

Source: Reuters

Morgan Stanley topped the list of major financial firms scrambling to find a buyer, while central banks rushed in $180 billion of extra liquidity to calm panicked stock and money markets.

Morgan Stanley was in deal talks with U.S. regional banking powerhouse Wachovia Corp and the negotiations have advanced to a more formal stage, a source familiar with the firm's plan said.

The No. 2 U.S. investment bank, whose shares are down 50 percent this month, has also approached Chinese sovereign wealth fund China Investment Corp about boosting its stake in Morgan Stanley, the source said, following a $5 billion investment late last year.

HSBC Holdings was named by CNBC as another potential bidder for Morgan Stanley, but a person familiar with the matter said the bank "is not interested."

Read more: http://www.reuters.com/article/newsOne/idUSHKG1567720080918?sp=true

[Supersedeas]

18. ...shhhhh....

[tpsbmam]

19. Merger of two firms, both in trouble...

(snips)

http://www.reuters.com/article/businessNews/idUSN1835383620080918

The logic of a Morgan Stanley (MS.N: Quote, Profile, Research, Stock Buzz) merger with Wachovia Corp (WB.N: Quote, Profile, Research, Stock Buzz) was questioned Thursday by investors and analysts who worried a combination of the investment bank and the troubled regional bank would not improve Morgan Stanley's prospects.

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Wachovia, based in Charlotte, North Carolina, is weighed down by its exposure to adjustable-rate mortgages. Moszkowski said a deal with Morgan would only create new earnings risks because the depths of Wachovia's own credit risk is uncertain.

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Such a deal also would fail to resolve Morgan's biggest need, which is reliable short-term funding, he said.

"The merger wouldn't create new deposits, and most of the combined company would still need market-based funding," Moszkowski said.