Bloomberg - Morgan Stanley Chief Executive Officer John Mack said tumbling markets may drive some hedge funds out of business, prompting his firm to “resize.”

“Friends in that community say that by year-end, you’ll see the number of firms in the hedge-fund area shrink, I’ve heard as large as 30 percent,” Mack, 63, told CNBC today. As the industry contracts, “we need to resize our prime brokerage,” he said.

Morgan Stanley’s prime brokerage unit, which lost clients last month after the bankruptcy of Lehman Brothers Holdings Inc. fueled a global bank crisis, is regaining some customers since sealing a $9 billion investment from Mitsubishi UFJ Financial Group Inc., Mack said.

“Funds that took some of their money, in some cases all their money, are coming back,” he said. “Without question those people who pulled out are coming back.”

Read Complete Article

Tags: absolute-return, aladdin, architects, arthur-sulzberger, charter-one-financial-inc, east-coast-routes, financial-statements, industry-spokesman, investment-firm, lehman-brothers-holdings, lehman-brothers-holdings-inc, lengthy-prison-terms, qualitative-assessment, quantitative-investment, sailfish-capital-partners-llc

Reuters – Japan’s Mitsubishi UFJ Financial Group, which has watched Morgan Stanley’s share price plunge 58 percent last week, is seeking more favorable terms to its $9 billion deal, a person briefed on the matter said.

The Japanese lender will still buy a 21 percent stake from Morgan Stanley for $9 billion, but will amend the terms to include only convertible preferred shares and no common stock, the source said.

Morgan Stanley is the latest stricken U.S. financial institution to seek refuge in a deal with a larger bank as the worsening credit crisis and accompanying market meltdown has narrowed the options of once stable banks and brokerages.

The Morgan Stanley news comes as Spain’s Banco Santander SA was in advanced talks to buy full control of Sovereign Bancorp Inc in a deal valued at $2.5 billion, according to another source familiar with the matter.

Read Complete Article

Tags: aftermath, aladdin, architects, arthur-sulzberger, bank-loans, eton-park, flexibility, investment-arm, law-experts, pessimism, significant-numbers, sovereign-bancorp, sovereign-bancorp-inc, spanish-property, spokeswoman, west-palm