Morgan Stanley Buys Etrade for $13 Billion

Morgan Stanley agrees $13bn deal to buy ETrade Morgan Stanley has become the latest elite Wall Street bank to turn to Main Street for its future growth, adding stock trading millennials to its customer base with the $13bn acquisition of online trading platform ETrade.

The deal — the largest by a global bank since the financial crisis and the second biggest by Morgan Stanley — comes as rival Goldman Sachs chases American consumers with its mass market wealth management business and online bank.




It also comes at a time of consolidation in the US wealth management market, most notably November’s $26bn merger between ETrade’s rivals Charles Schwab and TD Ameritrade, in the wake of falling fees from stock trading.


ETrade has more than 5.2m clients with assets totalling around $360bn on the platform, and Morgan Stanley described those clients as a «pipeline of emerging wealth».


The bank’s existing wealth management business, formed through decades of acquisitions including a $13.5bn deal to buy Smith Barney in 2009, manages around $2.7tn of assets for 3m typically wealthy clients.


After the deal, Morgan Stanley will make 57 per cent of its pre-tax profits from wealth management and investment management — less cyclical businesses that, since the financial crisis, investors have been valuing more highly than investment banking.