MUFG Publicly Reaffirms Support to Morgan Stanley

October 04 00:00 2011

New York, October 4 ( – Morgan Stanley (NYSE: MS) got a new lease of life Tuesday after Mitsubishi UFG Financial group reaffirmed its support to the US bank. Investors had turned negative on the bank’s outlook plunging its shares in recent days. MUFG, Japan’s largest bank by market capitalization, had earlier rescued Morgan Stanley in October 2008 in the wake of the collapse of Lehman Brothers and at the height of the financial crisis by acquiring preferred stock of the bank at a cost of $9 billion.

MUFG became Morgan Stanley’s largest shareholder with a 22.4 percent stake by converting the bulk of its stock into common shares earlier this year. However, the value of that stake has fallen by $1.8bn due to the collapse of global bank stocks on increased regulation and concerns about the impact on global investment banks of the sovereign debt crisis that is troubling Europe.

Share prices of Morgan Stanley have dropped 54 percent since the beginning of the year, having fallen 17 percent in the two trading days to Monday alone. MUFG said on Tuesday that “In response to recent market volatility MUFG wishes to reiterate that we are firmly committed to our long-term strategic alliance with Morgan Stanley,” and added that “The special relationship we have formed remains core to our global business strategy.”