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Morgan Stanley Message Board

  • sganjoo sganjoo Sep 20, 2008 4:22 PM Flag

    Somebody please explain

    Why does MS need to merge with WB? MS has more cash (800B vs 109B) and cash per share (800 vs 51) than wb. Plus, MS has better profit margin and return on equity than wb not to mention wb's marging are all NEGATIVE. I can understand CIC buying a larger piece because that would mean cash infusion but a deal with wb seems to be much more favorable for wb investors than MS. Any explanation will be appreciated but if you have something derogatory to say then please keep it to yourself. Thank you.

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    • It has nothing to do with cash. It has everything to do with hooking up with a large commercial bank. Commercial banks are in bed with the Fed and already have systems in place which integrate the two institutions.

      Also, a bigger organization adds to stability - especially since they will all be highly regulated now.

      One thing that does concern all these organizations merge into larger entities for 'safety', are we now creating another set of 'too big to fail' companies for 10 or 15 years from now? Maybe, maybe not.

    • If MS had CASH it would just go private, It is an asset count that your looking at. They need absolute liquidity in the form of WB's bank deposits, that I'm assuming are somewhere around 200+ mil. that jump on the 1st and 15th of every month.No borrowing costs daily, just hit the piggy

      • 1 Reply to markie4037
      • The CFO of Goldman says that investment banks are not allowed to tap deposit money for

        borrowing needs connected to capital markets activity. He said that almost verbatim

        when someone asked him whether Goldman is looking to buy a bank or hook up with one.

        He said, First, we have more than enough liquidity/cash....and Second, investment banks

        cannot use depositor monies for capital markets purposes. It's against the law. So,

        he says, he doesn't understand all this hoopla about having to tie up with a commer-

        cial bank.

        Anyone want to rebut????


    • MS has already explained that they are more than secure to stand on their own in a joint statement with GS. The merger talks is only for the purpose to solidify their position in a collapsing market.

      Just like war, when countries fall, it makes sense to ally yourself with others.

      MS is fine.

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