Morgan Stanley Wealth Management

History

Smith Barney & Co. was formed in 1938 through the merger of Charles D. Barney & Co. and Edward B. Smith & Co. Charles D. Barney & Co., a New York and Philadelphia based firm, was founded by Charles D. Barney in 1873 following the failure of its predecessor Jay Cooke & Company. Edward B. Smith & Co., founded in 1892 became a significant player in securities underwriting in 1934 when the firm absorbed the professionals from the securities business of Guaranty Trust Company, following the passage of the Glass Steagall Act.

In 1975, Smith Barney merged with Harris, Upham & Co. to form Smith Barney, Harris Upham & Co., which, in 1977, was placed under SBHU Holdings, a holding company. In 1982, SBHU Holdings was renamed Smith Barney Inc. During the 1980s, the company was known for its television commercials featuring actor John Houseman, with the catchphrase, "They make money the old-fashioned way. They earn it." After Houseman stepped down, the campaign continued with various actors, such as Leo McKern, Joel Higgins and George C. Scott.

In the late 1980s, the retail brokerage firm Smith Barney was owned by Sanford I. Weill's Primerica Corporation. Commercial Credit purchased Primerica in 1988, for $1.5 billion ($ today). In 1992, they paid $722 million ($ today) to buy a 27% share of Travelers Insurance and in 1993 acquired Shearson (which included the legacy business of E.F. Hutton) from American Express. By the end of 1993, the merged company was known as Travelers Group Inc. although the brokerage business continued to operate under the Smith Barney brand.

In 1993, Weill bought stockbroker Shearson back from American Express for $1 billion ($ today), and merged it into Smith Barney. (Weill had been in charge of Shearson Loeb Rhoades and sold it to American Express in 1981.) Weill offered Joe Plumeri the presidency of Smith Barney, and he became the President of the merged company that year. He only lasted a year, as he experienced conflicts with existing Smith Barney managers.

In September 1997, Travelers acquired Salomon Inc. (parent company of Salomon Brothers Inc.), for over $9 billion ($ today) in stock, and merged it with its own investment arm to create Salomon Smith Barney. In April 1998 Travelers Group announced an agreement to undertake a $76 billion ($ today) merger between Travelers and Citicorp, creating Citigroup, which at the time of the merger was the largest single financial services company in the world.

At the time of the September 11, 2001, attacks, it was the largest tenant in 7 World Trade Center, occupying 1,202,900 sq ft (111,750 m2) (64 percent of the building) which included floors 28–45.

Sale to Morgan Stanley

During the 2008 financial crisis, Citigroup suffered large losses in its retained collateralized debt obligation exposure (loans that Citi underwrote but was not able to sell), and had to be rescued by the U.S. federal government. They decided to sell or close "non-core" businesses in order to raise money. On January 13, 2009, Morgan Stanley and Citigroup announced the merger of Smith Barney with Morgan Stanley's Global Wealth Management Group, with Morgan Stanley paying $2.7 billion cash upfront to Citigroup for a 51% stake in the joint venture. The joint venture operates as Morgan Stanley Smith Barney. Morgan Stanley itself was in a financially cash-strapped position like Citigroup during that time, but they were helped by the $9 billion that Mitsubishi UFJ Financial Group had paid in 2008 for a 21% stake in Morgan Stanley. Cite web | access-date=4 November 2020

On June 1, 2009, Morgan Stanley and Citigroup announced they closed early on the launch of their joint venture that combines Morgan Stanley's wealth management unit (including many former Dean Witter assets) with Citi's Smith Barney brokerage division. The new venture, called Morgan Stanley Smith Barney, was supposed to launch during the third quarter. The combined entity generates about $14 billion in net revenue, has 18,500 financial advisors, 1,000 locations worldwide and serves about 6.8 million households.

Citigroup disclosed on September 17, 2009, they would sell their remaining shares in the group to partner Morgan Stanley.

Acquisition history

The following is an illustration of the company's major mergers and acquisitions and historical predecessors (this is not a comprehensive list): Smith Barney** (merged 2009) (merged 1997, formerly Morgan Stanley Dean Witter) (est. 1935) (merged 1978) (est. 1924) (est. 1931) (merged 1993)

(acq. 1985) (later acq. by Commercial Credit)

(merged 1938) (est. 1892) (est. 1873) (est. 1929, acq. 1975)

(merged 1988)

(merged 1984) (merged 1981) (est. 1850)

(acquired 1981) (merged 1973)

(formerly Carter, Berlind, Potoma & Weill, est. 1960) (est. 1902)

(merged 1978) (merged 1937) (est. 1931) (est. 1905) (merged 1953–1977) (est. 1888) (est. 1919, acq. 1963) (est. 1866 as Trask & Brown) (est. 1920, acq. 1953)

(merged 1977) (est. 1850) (est. 1867) (est. 1938, acq. 1975) (est. 1904)

References

References

1. Kapner, Suzanne. (February 22, 2012). "Citigroup Faces Smith Barney up from 546$Billion in november 2007 Hit". [[The Wall Street Journal]].
2. (Sep 25, 2012). "Morgan Stanley Smith Barney is Now Morgan Stanley Wealth Management". Morgan Stanley.
3. [https://web.archive.org/web/20070505065723/http://www.time.com/time/magazine/article/0,9171,758712,00.html Business: Marriage of Convenience]. ''TIME'' Magazine, December 20, 1937
4. 1-55862-218-7
5. Elliott, Stuart. (August 25, 1995). "THE MEDIA BUSINESS: ADVERTISING; Smith Barney summons the ghost of a haughty John Houseman in a revival of its 'timeless' ads". The New York Times.
6. The Dispatch]]'', March 13, 1994, accessed July 16, 2010
7. (22 April 1981). "American Express to Buy Shearson as Takeovers Transform Wall St.". The New York Times.
8. (October 2, 2000). "Plumeri next Willis CEO; Former Citigroup executive to succeed Reeve". Business Insurance.
9. (January 15, 2001). "Willis chief discusses changes in financial services. (Willis Group Ltd. CEO Joseph J. Plumeri)(Interview)". Business Insurance.
10. Bianco, Anthony. (March 30, 1998). "Joe Plumeri: The Apostle of Life Insurance". [[Business Week]].
11. Ben Duronio. (June 12, 2012). "Morgan Stanley Is Killing 'Smith Barney' — Here's The Story Of How It Died". [[Business Insider]].
12. Gilsanz, Ramon. (May 2002). "World Trade Center Building Performance Study". FEMA.
13. (2001). "Building: 7 World Trade Center". CNN.
14. (January 13, 2009). "Morgan Stanley and Citi to Form Industry-Leading Wealth Management Business Through Joint Venture". Citigroup.
15. (15 May 2018). "Breakingviews - Morgan Stanley has paid off smartly for MUFG".
16. [https://web.archive.org/web/20090611205017/http://www.businessweek.com/ap/financialnews/D98HT3I01.htm BusinessWeek]
17. Rieker, Matthias. (September 17, 2009). "Citi Plans to Shed Stake in Smith Barney". The Wall Street Journal.
18. "Salomon Smith Barney" from Gambee, Robert. ''[https://books.google.com/books?id=SmkuiHw8im4C&pg=PA73 Wall Street]''. W. W. Norton & Company, 1999. p. 73