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Quick Hits: Morgan Stanley to Acquire Commercial Banks?


Brief scrutiny of today's headlines.


Morgan Stanley (MS) is down to its last $36 billion - a bit more than most of us have sloshing around in our checking accounts, but a good deal less than the $800 billion or so the company had on hand before the credit crunch.

Morgan converted to a bank holding company 2 months ago, and is currently reviewing a number of ways to boost deposits, The Wall Street Journal reports.

Morgan Stanley may acquire some regional banks, including a few with a customer base that overlaps its current brokerage and asset-management business.

No names have been discussed, and there's no indication when any such deals might be completed.

It could be a smart move, because about 20% of all US households hold about 75% of bank deposits. This suggests Morgan Stanley will be extremely selective if it acquires commercial banks.

However, it's unlikely that stockbrokers will pitch CDs. Morgan Stanley is also unlikely to revive the supermarket approach that lead Dean Witter to sell mutual funds at Sears (SHLD), back when the brokerage firm owned the retailing giant. That effort was derided as "stocks and socks" by its detractors - and it wasn't successful.

Dean Witter and Morgan Stanley merged in 1997. The company spun off its Discover credit card business last year, a move executives say they don't regret. This suggests Morgan Stanley isn't eager to get back in the credit-card business.

Other venerable names have reorganized as bank holding companies, including Goldman Sachs (GS) and American Express (AXP).

Somewhere in the not-too-distant future, there are likely to be ATM machines with the Morgan Stanley logo.

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No positions in stocks mentioned.
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