Morgan Stanley CFO says firm has capital for deals
NEW YORK |
NEW YORK (Reuters) - Morgan Stanley is looking far and wide for acquisitions that can build up its retail banking business, and it has the capital "firepower" to pursue deals, Chief Financial Officer Colm Kelleher told Reuters on Wednesday.
Kelleher, in an interview after the firm announced a worse-than-expected $2.2 billion fourth-quarter loss, said Morgan has slashed its balance sheet by 37 percent to $658 billion this year. With the benefit of infusions from a Japanese bank and the U.S. Treasury, it has also raised its capital ratio, a key measure of financial strength.
That means it can pursue takeovers to build deposits, an important part of its strategy in the new, more challenging market environment.
"We will look at anything. We clearly have a very high Tier One capital ratio. We have lot of liquidity," he said. "We have firepower to do things, which we intend to do, and we are looking at very many opportunities. But they must fit within the strategy of this firm."
Since converting to a bank holding company in September in an effort to appease investors who had lost confidence in the broker-dealer model, Morgan Stanley has taken steps to create a consumer bank.
In contrast, rival Goldman Sachs Group is maintaining its focus on corporate and institutional business. Morgan already has a major retail business through a brokerage operation that caters to individual investors.
In an effort to expand its access to stable, low-cost funding, Morgan wants to expand its deposit base. It recently hired some Wachovia Corp consumer banking executives to help build up a significant deposit-gathering business.
Already, Morgan's bank unit has amassed $42 billion of deposits, most of it from its wealth management business. Kelleher said the firm intends to grow its deposit base to as much as 50 percent of funding needs within three years.
Currently deposits comprise more then 35 percent of its needs, he said.
"We want to grow our deposits, but we want to grow them within the strategy that we have laid out," said Kelleher, who noted Morgan Stanley had expressed interest in buying private banks in the past.
Kelleher emphasized that Morgan Stanley is not out to create a bank of the same scale as a JPMorgan Chase & Co or a Citigroup Inc.
"We do not see ourselves as a bulge-bracket depository institution," he said. "We have a leading franchise including investment banking, asset management and wealth management. Our belief is we can leverage up the deposit base off our global wealth management franchise."
(Editing by John Wallace)
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