Business as usual at Citi's Smith Barney
Global financial services firms Morgan Stanley and Citi have struck a deal to form a global wealth management platform through a joint venture.
The agreement will see Citi exchange three business units, including private wealth management business Smith Barney Australia, for a 49 per cent stake in the joint venture and an upfront cash payment of US$2.7 billion. Morgan Stanley will have a 51 per cent share through an exchange of its Global Wealth Management business.
A spokesperson for Citi Smith Barney Australia said the deal was a move towards building the businesses, not a cost-cutting measure, and therefore staff in Australia would not be affected by the change.
However, in a statement by the firms, it was reported the joint venture is expected to realise cost savings of $1.1 billion partly by “rationalising and consolidating key functions”.
As US-based Morgan Stanley does not have a retail presence in Australia, the deal was likely to have minimal impact on the Australian business.
The joint venture will combine the businesses’ resources globally, with Citi and Morgan Stanley distributing their products through the wealth management platform. Through the joint venture, clients will be given access to both Citi’s and Morgan Stanley’s global networks.
Smith Barney Australia currently has six offices across Australia, with 175 financial advisers and planners on staff.
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