NEW YORK -- Morgan Stanley Dean Witter & Co. is seeking to exit the global custody business, only about a year after it made a big splash by acquiring the global custody business of Barclays Bank PLC. The company is shopping the business to other major global custodial organizations. It has talked with Chase Manhattan Bank, Bankers Trust Co., and Bank of New York.
Morgan Stanley & Co.'s merger with Dean Witter Discover & Co. since the Barclays acquisition, however, prompted the firm to change its strategic focus. Now, it is devoting more resources to investment management and other securities areas at the expense of the custody business.
Morgan Stanley ranks as the fifth largest global custodian in terms of custody assets for U.S. tax-exempt clients, with some $60 billion as of June 30, the company reported for a Pensions & Investments survey. And it ranks as the sixth largest global custodian in terms of total assets in custody worldwide, with $415 billion. It has more than 170 clients worldwide, according to the company.
Its global custody business has "performed well," according to a company statement.
But like other custodians, it has the expensive challenge of continually keeping pace with technology and competition in this highly systems-oriented business. In addition, custodians face the uncertain technology expenses of resolving the 2000 computing-dating problem and preparing for the introduction of the euro in 1999.
"We believe that the resources necessary to achieve greater scale and maintain market leadership in global custody and correspondent clearing can be utilized to capture opportunities in our core securities, asset management and credit services businesses," a statement said.
Executives for some global custodial institutions declined to comment, or said they were unaware of Morgan Stanley's intentions to sell its global custody business.
Morgan Stanley closed the Barclays global custody deal in April 1997. The deal added $325 billion from Barclays to Morgan Stanley's then-custody assets of $135 billion. The deal involved mainly non-U.S. clients. Many of them were insurance companies in the United Kingdom, some of which left for other global custodians.
Morgan Stanley is the primary supplier of a private label global custody arrangement for Norwest Bank, with $2 billion in such assets; PNC Bank, with $8 billion; Comerica Bank, with $1.57 billion; and Key Trust of Ohio NA, with $1.5 billion.
Morgan Stanley's global custody has more than 500 employees in 11 offices.
