Morgan Stanley (NYSE:MS) and Citigroup Inc. (NYSE:C) closed Monday on their brokerage joint venture, months ahead of schedule. The deal, which mergers Morgan Stanley's global wealth management group with Citi's Smith Barney U.S. unit, was originally targeted to close in the the third quarter of 2009.
The combined brokerage, called
Morgan Stanley Smith Barney, has more than 18,500 financial advisers working in 1,000 brokerages worldwide. The venture is 51% owned by Morgan Stanley, which has the right to increase its stake after three years.
As we've
noted previously, integration will be critical to the success of the new organization, and the release announcing the close did offer a glimpse into one aspect of that effort. According to the companies, Citi will fund, and Morgan Stanley will make equity grants to Citigroup employees to offset benefits they'll lose by joining the JV. Keeping employees happy is one piece of the integration. Merging back-office systems, training brokers to cross-sell products and blending cultures are just as important.
The venture is a critical component of each firm's survival strategy, but it's particularly important for
Citigroup, which on Monday was removed from the Dow Jones Industrial Average. Citi has traded below $5 for most of 2009 and is in the process of granting the U.S. government a 34% stake in the firm.
- Suzanne Stevens
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