NEW YORK — Morgan Stanley averted disaster with a $9 billion lifeline from a major Japanese bank and declared Monday that it will use that money to pick off smaller rivals.
Just a few days ago, some on Wall Street questioned if the investment bank would be the next to collapse amid a deepening credit crisis. Now, Morgan Stanley appears emboldened by the 21 percent stake taken by Japanese lender Mitsubishi UFJ, and it seems to have regained the market’s confidence.
Investors poured back into Morgan Stanley shares, which last week plunged 60 percent. Shares recouped $8.42, or 87 percent, to close at $18.10.
“This is Darwinism finance, literally the survival of the fittest for the banks,” said Chris Johnson, chief investment strategist at Johnson Research Group. “This is Wall Street’s version of ‘The Amazing Race,’ where these companies are going to jump through hoops and rings of fire to rebuild their businesses as quickly as possible.”
The closing of the Morgan Stanley deal came as Spain’s Banco Santander SA said it was in talks to acquire Pennsylvania’s Sovereign Bancorp. Forging ahead with similar takeovers appears to be exactly what John Mack, Morgan Stanley’s chairman and chief executive, plans to do now that the nation’s No. 2 investment bank is on more solid footing.
Mack, 63, told employees in a memo that he “will be looking at acquisitions that might make sense for the firm.”
