Wells Fargo to buy Morgan Stanley?

Stephen Foley

Our Stock Market Reporter has heard a rumour.

Here is our exchange:

To: Stephen Foley/Editorial/Independent News
From: Toby Green/Editorial/Independent News
Date: 10/07/2011 10:43AM

hearing v vague market rumours that wells fargo is going to buy morgan stanley. ms is down so doesn’t seem to be doing anything, but is it a ridiculous idea?

To: Toby Green/Editorial/Independent News
From: Stephen Foley/Editorial/Independent News
Date: 10/07/2011 10:58AM
Subject: Re:

um… i wouldn’t go as far as ridiculous, but i have a long list of reasons why it’s unlikely wells fargo shareholders would go for it. regulatory situation is too uncertain to be making such bold strategic moves. morgan stanley and the rest of wall street are having a tough time at the moment, so you’d have to persuade them that retail banking is even worse. there will be an almighty backlash against a TBTF bank getting even bigger.

the last of those reasons is also why regulators would be unlikely to say yes. the fed is still reviewing capital one’s proposed takeover of ing direct, which is a much smaller deal.

morgan stanley’s broker network is a potentially attractive asset if you want to build a diversified financial company and offset risks in your banking divisions.

it sounds to me like a more subtle form of the bear raid on morgan stanley earlier this week. “it must be in real peril from its exposure to europe if it is considering a merrill lynch-style shotgun marriage.”

proceed with care!

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