Morgan Stanley cash injection
Tuesday 14th October 2008, 10:36AM BST.
Japanese bank Mitsubishi UFJ (MUFG) has agreed to inject $9 billion (£5 billion) of capital into Morgan Stanley.
The cash follows an agreement made in September to support the US bank, which was threatened with failure after the collapse of Lehman Brothers.
The original deal had to be renegotiated after Morgan Stanley’s stock plunged amid the recent stock market falls.
Rumours MUFG was considering pulling out of the deal contributed to the 58 per cent dive in the stock’s value.
MUFG will still buy a 21 per cent stake in Morgan Stanley and put one executive on the board, but it will now buy preferred stock that pays a ten per cent dividend.
“As mutual strategic partners, MUFG and Morgan Stanley intend to pursue a global strategic alliance in a broad range of areas including corporate and investment banking, retail banking and asset management,” MUFG said.
The US government may also become a shareholder in Morgan Stanley, as part of a part-nationalisation plan to recapitalise ailing banks.
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