Sunday, January 11, 2009

Citigroup, Morgan Stanley talk about merging units

NEW YORK — Officials at the embattled banks Citigroup and Morgan Stanley will negotiate over the weekend about possibly combining their wealth management businesses, a deal mostly aimed at bolstering Citi with much-needed cash.

The deal to merge Citi's Smith Barney with Morgan Stanley's comparable division was confirmed late Friday by a person familiar with the talks, who spoke on condition of anonymity because he was not authorized to discuss the matter.

The negotiations come as investors digested news that Robert Rubin, a senior adviser to Citi who has drawn heavy criticism, would resign from the bank. The person said it was Mr. Rubin's decision to leave Citigroup and that “there was no inside pressure,” or government pressure.

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