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NEW YORK, Oct 13, 2008 (AFP) - Mitsubishi UFJ Financial Group, Japan's largest financial group, has bought a 21 percent stake in Wall Street bank Morgan Stanley for nine billion dollars, the companies said Monday.
The investment was part of a previously announced global strategic alliance between Morgan Stanley and MUFG, the world's second-largest bank holding company with 1.1 trillion dollars in bank deposits.
Under the deal, Mitsubishi has acquired preferred shares paying a 10 percent dividend
"The MUFG investment further bolsters Morgan Stanley's already strong capital position," the companies said.
Shares of Morgan Stanley, one of only two independent investment banks left on Wall Street, fell sharply last week, raising speculation that Mitsubishi might pull out of the deal and making Morgan Stanley a candidate for a recapitalization from the US government, analysts said.
For investors, the pressure on Morgan Stanley stems from uncertainty about its exposure to losses, particularly complicated securities called credit default swaps which insure buyers against default.
The deal received a greenlight from US federal authorities a week ago and could be concluded Tuesday after a mandatory legal delay.
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