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RETAIL FINANCIAL SERVICES | Staff Reporter, Japan
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Morgan Stanley, MUFG integrate operations in Japan

Mitsubishi UFJ Financial Group and Morgan Stanley are expected to commence joint venture operations on 1 May 2010.

The two firms have entered into definitive agreements to integrate their securities operations and will collaborate in a number of business and product areas in Japan through a joint ownership structure. The parties agreed to create two companies comprising their joint venture, Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. (MUMSS), and Morgan Stanley MUFG Securities Co., Ltd. (MSMS).

MUMSS will continue the existing Japan-based retail, middle markets, capital markets, and sales and trading businesses of Mitsubishi UFJ Securities Co., Ltd. while the investment banking team of Morgan Stanley Japan Securities Co., Ltd. will be integrated with the investment banking team of MUS. The new company will be an MUFG consolidated entity, with MUFG holding a 60 percent interest in MUMSS while Morgan Stanley holds a 40 percent interest.

Meanwhile MSMS will comprise the existing sales and trading and capital markets operations of MSJS. While the economic interests of MUFG and Morgan Stanley in MSMS will be 60 percent and 40 percent respectively, Morgan Stanley will have a 51 percent voting interest in MSMS and MUFG will have 49 percent, making MSMS a consolidated Morgan Stanley entity.

The two joint venture companies will collaborate in providing capital markets services to investment banking clients of MUFG and Morgan Stanley and in offering a wide range of products and services, including Morgan Stanley's global products and services to MUFG's retail and middle market customers in Japan as well as to investment banking clients of both parties. The two joint venture companies will continue to offer products and services in sales and trading and research areas separately.

Nobuo Kuroyanagi, President and Chief Executive Officer of MUFG, said, "Finalising this agreement with Morgan Stanley represents a tremendous step forward for our two organizations’ overall strategic alliance. MUMSS and MSMS aim to effectively meet the increasingly sophisticated and diverse financial needs of our extensive client base by merging MUFG's comprehensive domestic financial service network with MS's global reach and high quality products and services."

James P. Gorman, President and Chief Executive Officer of Morgan Stanley, said the agreement underscores their strong commitment to Japan. "We look forward to pursuing our common goals to create a new powerful leader in the Japanese securities industry, while continuing to leverage our strong global strategic alliance with MUFG."

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