Morgan Stanley May Slow To Acquire All Of Smith Barney

Morgan Stanley (NYSE: MS) has options in terms of how quickly it can increase its stake in Smith Barney, the brokerage firm that Morgan Stanley acquired 51% of from Citigroup (NYSE: C).

Nomura Holdings analyst Glenn Schorr said in a note that Morgan Stanley agreement with Citigroup gives it options for slowing a purchase and preserving capital, according to Bloomberg News.

Morgan Stanley said it still plans to acquire Smith Barney under previously disclosed schedule. The bank can acquire an additional 14% of Smith Barney in 2012, 15% more in 2013 and the remainder of Citi's stake in 2014.

Citigroup has the ability to force Morgan Stanley to buy its stake in 2015, unless Morgan Stanley utilizes its first option in 2012, Schorr said, Bloomberg reported.