Morgan Stanley Acquires E*Trade for $13B

Morgan Stanley apparently has its sights set on the online brokerage industry.

The Wall Street Journal reports that the New York-based investment banking giant has acquired E*Trade Financial Corporation for $13 billion in an all-stock deal.

The acquisition is reportedly the largest a U.S. bank has made since the Great Financial Crisis, and it brings Morgan Stanley 5 million new customers, $360 billion in assets, and a web-based bank.

E*Trade CEO Michael Pizzi is slated to run the e-brokerage business, while E*Trade itself gets to keep its business model, storefronts, and buzzy ad campaigns.

Morgan Stanley CEO James Gorman meanwhile said that his company will “take on Schwab” and “take on Fidelity,” adding that “this isn’t about legacy-building; it’s about getting [Morgan Stanley] ready for prime time.”

Gorman apparently has been eyeing E*Trade since he was an executive at Merrill Lynch. He reached out to the firm while managing Morgan Stanley’s brokerage unit in 2007, but the deal fell apart after E*Trade’s home-equity loan portfolio started getting sketchy.

E*Trade, like most of its peers, has been jonesing to get into the cryptocurrency industry. Bloomberg reported last April that the brokerage was preparing to launch crypto trading with bitcoin (BTC) and Ethereum (ETH) trading as its first offerings. It has yet to officially launch the service, however.

Photo: Ajay Suresh