BY Fraser Tennant
In a combination which creates an industry leader in wealth management, global financial services firm Morgan Stanley is to acquire online brokerage industry company E-Trade in a deal valued at $13bn.
A pioneer in the digital brokerage and banking space for nearly 40 years, E-Trade’s consumer-facing technology platforms and digital banking services, including direct integration with brokerage accounts, checking and high-yield savings accounts, is expected to complement and significantly accelerate Morgan Stanley’s digital banking efforts.
“Since we created the digital brokerage category nearly 40 years ago, E-Trade has consistently disrupted the status quo and delivered cutting-edge tools and services to investors, traders and stock plan administrators,” said Mike Pizzi, chief executive of E-Trade. “By joining Morgan Stanley, we will be able to take our combined offering to the next level and deliver an even more comprehensive suite of wealth management capabilities.”
For Morgan Stanley, the acquisition marks the continuation of a decade-long effort to rebalance its portfolio of businesses, so that a greater percentage of its revenues and income are derived from balance sheet light and more durable sources of revenues.
“E-Trade represents an extraordinary growth opportunity for our wealth management business and a leap forward in our wealth management strategy,” said James Gorman, chairman and chief executive of Morgan Stanley. “The combination adds an iconic brand in the direct-to-consumer channel to our leading adviser-driven model, while also creating a premier workplace wealth provider for corporations and their employees.
“E-Trade’s products, innovation in technology and established brand will help position Morgan Stanley as a top player across all three channels: financial advisory, self-directed and workplace,” continued Mr Gorman. “In addition, this continues the decade-long transition of our firm to a more balance sheet light business mix, emphasising more durable sources of revenue.”
Morgan Stanley’s acquisition of E-Trade is subject to customary closing conditions, including regulatory approvals and approval by E-Trade shareholders, and is expected to close in the fourth quarter of 2020.
Mr Gorman concluded: “We look forward to welcoming the infusion of management and technology talent that E-Trade will bring to Morgan Stanley.”