Mitsubishi UFJ Financial Group (MUFG) and Morgan Stanley have entered into definitive agreements to integrate their securities operations in Japan, and are expected to commence joint venture operations as of May 1, 2010.
Through a joint ownership structure, the parties will collaborate in a number of business and product areas in Japan, to offer a full range of institutional businesses, domestic retail brokerage network with global reach.
MUFG and Morgan Stanley, in a move that will allow them to leverage their respective strengths and networks, agreed to create two companies comprising their joint venture, Mitsubishi UFJ Morgan Stanley Securities (MUMSS) and Morgan Stanley MUFG Securities (MSMS).
The MUMSS will continue the existing Japan-based retail, middle markets, capital markets, and sales and trading businesses of Mitsubishi UFJ Securities(MUS).
The investment banking team of Morgan Stanley Japan Securities (MSJS) will be integrated with the investment banking team of MUS to create an investment banking organization in Japan, serving both MUFG’s and Morgan Stanley’s local and global client networks.
MUFG will hold a 60% interest in MUMSS while Morgan Stanley holds a 40% interest, making MUMSS a consolidated entity of MUFG.
MUFG will designate Fumiyuki Akikusa as MUMSS’ president and CEO. MUFG will also designate Hideyuki Nakajima as deputy president and CEO of retail and middle markets, and will designate Toshiyuki Hatakama as deputy president and CEO of sales and trading. Morgan Stanley will designate Haruo Nakamura as deputy president and CEO of MUMSS’s investment banking.
MSMS will comprise the existing sales and trading and capital markets operations of MSJS. While the economic interests of MUFG and Morgan Stanley in MSMS will be 60% and 40% respectively, Morgan Stanley will have a 51% voting interest in MSMS and MUFG will have 49%, making MSMS a consolidated Morgan Stanley entity. Morgan Stanley will designate Jonathan Kindred as president and CEO.
The two joint venture companies will collaborate in providing capital markets services to investment banking clients of MUFG and Morgan Stanley and in offering a range of products and services, including Morgan Stanley’s global products and services to MUFG’s retail and middle market customers in Japan as well as to investment banking clients of both parties. The two joint venture companies will continue to offer products and services in sales and trading and research areas separately.
Nobuo Kuroyanagi, president and CEO of MUFG, said: “Finalizing this agreement with Morgan Stanley represents a tremendous step forward for our two organizations’ overall strategic alliance. MUMSS and MSMS aim to effectively meet the increasingly sophisticated and diverse financial needs of our extensive client base by merging MUFG’s comprehensive domestic financial service network with MS’s global reach and high quality products and services.”
James Gorman, president and CEO of Morgan Stanley, said: “We look forward to pursuing our common goals to create a new powerful leader in the Japanese securities industry, while continuing to leverage our strong global strategic alliance with MUFG.”