Morgan Stanley to jumpstart deposit growth with E*Trade deal

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Share that deposits represent in funding mix will jump to 26% with the purchase. FMTNews MorganStanley ETrade

NEW YORK: Morgan Stanley has struggled in the past four years to increase the share of deposits in its funding mix. Now, with the acquisition of E*Trade, that’s about to change.

The share that deposits represent in Morgan Stanley’s funding mix will jump to 26% with the purchase, up from last year’s 21%, a level where the figure had lingered for years. That’s because E*Trade is adding US$56 billion of client deposits to Morgan Stanley’s US$190 billion.Even though it became a bank holding company at the height of the financial crisis, the firm’s roots as an investment bank and wealth manager meant retail deposits remained a small portion of the mix.

Deposits are desirable: they’re a cheap form of funds in the current low-interest-rate environment, and they’re treated as more secure than alternatives under post-crisis regulations.

 

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