Morgan Stanley-Mitsubishi venture to post loss: report

NEW YORK (Reuters) – Morgan Stanley (MS.N: Quote, Profile, Research) and Mitsubishi UFJ Financial Group (8306.T: Quote, Profile, Research) posted a bond-trading loss in their Japanese brokerage joint venture that will lead to a roughly $951 million loss, the Wall Street Journal reported late on Friday.

The loss occurred at Mitsubishi UFJ Morgan Stanley Securities Co, people familiar with the matter told the newspaper, which reported on its Internet site.

The venture is 60 percent owned by MUFG and 40 percent owned by Morgan Stanley, the Journal said. The loss will be recorded for the fiscal year ended March 31 that will be shared by the two owners, the people said told the Journal.

Morgan Stanley’s share of the loss will be about $385 million. The bank is expected to record the loss in its first-quarter earnings report to be released this month, the Journal said.

Morgan Stanley nor Mitsubishi representatives could not be reached for immediate comment.

Analysts had expected the bank to report a profit of $875.2 million. MUFG owns one-fifth of Morgan Stanley, the result of a $9 billion investment made during the financial crisis, the Journal said.

The banks would not say what caused the loss, which appeared to be the result of investments made by MUFG traders, the Journal said.

The joint venture may issue new shares to Mitsubishi UFJ Securities Holdings Co, the holding company for MUFG’s brokerage operations to bolster its capital, the people told the Journal. The share issuance is likely to take a form that will not dilute Morgan Stanley’s stake in the joint venture, one person familiar with the matter told the Journal.

The Nikkei business daily reported that Mitsubishi UFJ Securities Holdings Co was considering selling off its stake in major Singaporean brokerage Kim Eng Holdings Ltd to cover a large trading loss at a subsidiary.

In light of these developments, Mitsubishi UFJ Morgan Stanley Securities has begun discussing additional restructuring measures, including slashing its payroll by more than 500, the daily said.

(Editing by Ron Popeski)

Morgan Stanley-Mitsubishi venture to post loss: report