Morgan Stanley stated Thursday it will purchase discount brokerage E*Trade Financial Corp in a stock deal worth about $13 billion, the biggest acquisition by a Wall Street bank since the 2008-2009 monetary crisis.
Part of a broader consolidation in the low-cost brokerage industry, the move will add breadth to Morgan Stanley’s wealth management unit, a business that CEO James Gorman has been attempting to construct out to insulate the bank from weak intervals for buying and selling and investment banking.
Morgan Stanley’s main competitor, Goldman Sachs, has also been forging ahead with an upstart retail financial institution, while others, including Bank of America and UBS, are trying to give attention to basic lending and wealth management services.
The contract reflects a more relaxed regulatory mood under Prez Donald Trump’s administration, which has helped unleash other big-ticket takeovers in the financial market.
Large banks have been encouraged to do deals that would have been tricky for the Wall Street titans under Obama’s administration.
In March 2019, U.S. regional bank Fifth Third Bancorp’s purchase of smaller rival MB Financial for $4.7 billion got a green light from regulators. It was followed by permission for a $28 billion marriage of BB&T Corp and SunTrust.
Banking offers, in particular, had failed after the financial crisis as strict capital and liquidity rules had been placed on lenders with over $50 billion in assets, making it unattractive for mid-size corporations to accumulate more assets.