Citigroup may merge Smith Barney unit with Morgan Stanley

More upheaval on Wall Street: Citigroup may jettison its Smith Barney brokerage unit, merging it with Morgan Stanley in a joint venture, CNBC reported today, citing unidentified sources.

The Wall Street Journal's website also is reporting talks between Citi and Morgan.

From Bloomberg News:

Morgan Stanley, which has about 8,000 brokers, would hold the larger stake in the venture, which would become the biggest such firm in the U.S. with the addition of 11,000 brokers from Citigroup, CNBC said.

Bank of America Corp., which bought Merrill Lynch & Co. on Jan. 1, has about 15,000 brokers.

Morgan Stanley could increase its stake in the venture over the course of several years, and is expected to eventually buy all of it, CNBC said.

While the talks are advanced, no deal has been concluded, CNBC said.

The market seems to like the deal for Morgan’s sake -- but not for beleaguered Citi’s.

Morgan shares rose 24 cents, or 1.3%, to $19.06 today, while Citigroup shares fell 41 cents, or 5.7%, to $6.75.

-- Tom Petruno

Comments

[John]

This is great news for Smith Barney!

Morgan seems to be the best firm on the street.

[Darius Raulinaitis,CFA]

Vikram, Let our people go. We have no interest in being part of the universal bank. When we do sleep it is with one eye open. We don't want to be part of the Citi that never sleeps. Sell us to he highest bidder.

[Darius]

All we want is to get away from the Citi that never sleeps! "Vikram let our people go!!!" Remember that GWM sleeps with one eye open while GWD (Global Wealth Destruction) has both eyes closed.

[Trader Mom]

I think we might see a good long entry somewhere around here for Morgan Stanley.