Morgan Stanley, Citigroup speed up launch of MSSB

Morgan Stanley and Citigroup Inc. said today they closed early on the launch of their joint venture that combines Morgan Stanley's wealth management unit with Citi's Smith Barney brokerage division.

Morgan Stanley and Citigroup Inc. said today they closed early on the launch of their joint venture that combines Morgan Stanley’s wealth management unit with Citi’s Smith Barney brokerage division.

The new venture, called Morgan Stanley Smith Barney, was supposed to launch during the third quarter.

The two New York banking giants reached a deal in January to combine their brokerage arms. Morgan Stanley paid $2.7 billion to Citigroup as part of the deal.

Morgan Stanley holds a 51-percent stake in the firm. After three years, Morgan Stanley will have the option to increase its stake.

The combined entity generates about $14 billion in net revenue, has 18,500 financial advisers, 1,000 locations worldwide and services about 6.8 million households.

The joint venture will eventually lead to about $1.1 billion in cost savings after its operations are fully integrated, which will take about two years.

To replace equity awards Citi employees lost because of the deal, Morgan Stanley will make stock grants to retain Citi workers. Morgan Stanley will award up to five million shares of common stock through the equity plan to up to 15,000 Citi employees who are being transferred to the new joint venture.

Morgan Stanley shares rose 50 cents to $30.82 in premarket trading. Citi shares increased 5 cents to $3.77.