Morgan Stanley to buy rest of Smith Barney this month

REUTERS - Morgan Stanley said on Friday it will buy the rest of Citigroup Inc's retail brokerage holdings in the coming weeks for $4.7 billion after regulators signed off on the purchase.

The deal will complete a process that started in 2009, when Morgan Stanley said it was effectively buying Citigroup's Smith Barney brokerage business over time.

The financial crisis-era transaction was designed to provide extra capital to Citigroup, and give Morgan Stanley stable revenue after it was hit by trading losses in its investment bank.

The two companies merged their retail brokerage businesses into a joint venture, with Morgan Stanley owning a slim majority of the unit. Morgan Stanley's stake rose over time to 65 percent, and it said Friday will buy the other 35 percent of the venture sometime around June 28. The two banks negotiated the price for the final stage of the deal last year.

Morgan Stanley required approval from the Federal Reserve to buy the remainder of the joint venture. It was not immediately clear which other regulatory approval, if any, the bank needed.

Morgan Stanley Wealth Management is the largest U.S. brokerage by adviser headcount and client assets.

In a presentation earlier this month at an investor conference, Chief Executive James Gorman said the Morgan Stanley Wealth Management business will have at least $138 billion in deposits by 2015. That would put the bank among the top 10 by deposits in the United States.

(Reporting by Dan Wilchins in New York and Tanya Agrawal in Bangalore; Editing by Jeffrey Benkoe)