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Morgan Stanley agrees $13bn swoop for ETrade

Morgan Stanley has agreed to buy online brokerage ETrade for $13bn

Morgan Stanley has agreed to buy online trading brokerage ETrade for $13bn, in the biggest takeover by a major American bank since the 2008 financial crisis.

The Wall Street giant said the all-stock deal “positions Morgan Stanley to be an industry leader in Wealth Management across all channels and wealth segments”.

ETrade has more than 5.2m client accounts and more than $360bn of retail client assets, which Morgan Stanley will add to the $2.7tn of assets it manages for three million wealthy clients.

The move continues Morgan Stanley’s strategy of focusing on asset management rather than investment banking and high-stakes trading.

Online brokerage price war

E-Trade has struggled amid a price war that has broken out among brokerages. Late last year America’s largest online brokerage, Charles Schwab, cut fees for stock trading and exchange-traded funds, which forced rivals to follow suit.

The acquisition comes less than two months after Charles Schwab, unveiled a $26bn takeover of TD Ameritrade, the second biggest player in the market.

Last month, Wall Street rival Goldman Sachs said that it intended to grow its retail deposit base to $125bn, and its consumer loan and card balance to $20bn, over the next five years. It also bought wealth manager United Capital last year.

ETrade shareholders will receive 1.0432 shares for each Morgan Stanley share. Shares in ETrade rose 24 per cent in pre-market trading. Shares in Morgan Stanley, which has a market capitalisation of about $90bn, fell 3.66 per cent in early trading.

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Roger Baird

Roger Baird is News Editor at Finixio. He has worked as a financial journalist for 20 years reporting on companies, capital markets and the UK economy.