Morgan Stanley · NYSE:MS
Morgan Stanley — Merger or Acquisition (February 2020)
23 slides from Morgan Stanley's merger presentation, Feb 20, 2020
Slide 1: The Next Strategic Step in Our Transformation
The Next Strategic Step in Our Transformation February 20, 2020
Slide 2: Notice
Notice Important Information about the Transaction and Where to Find It In connection with the proposed transaction between Morgan Stanley (“Morgan Stanley”) and E*TRADE (“E*TRADE”), Morgan Stanley and E*TRADE will file relevant materials with the Securities and Exchange Commission (the “SEC”), incl
Slide 3: Notice
Notice All such forward-looking statements are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed in such forward-looking statements. Important risk factors that may cause such a difference include, but are not limited to, (i) th
Slide 4: Strategic Rationale
Strategic Rationale 1 Accelerates Business Mix Towards Balance Sheet Light and More Durable Sources of Revenue (1) 2 Leverages Dynamic Tech-Driven Company with Iconic Brand, Providing Access to the Next Generation 3 Services the Full Spectrum of Wealth Through Advisory, Workplace, and Direct Channel
Slide 5: Accelerates Business Mix Towards Balance Sheet Light and More Durable Revenue
1 Accelerates Business Mix Towards Balance Sheet Light and More Durable Sources of Revenue Wealth Management Wealth Management 2010 – 2014 2015 – 2019 The Transformation Continues… Acquisition of Solium, Enhancement Acquisition of E*TRADE: Acquisition and Integration of Technology Offering, and Tran
Slide 6: Leverages Dynamic Tech-Driven Company with Iconic Brand
2 Leverages Dynamic Tech-Driven Company with Iconic Brand, Providing Access to the Next Generation Pioneering Brokerage ~$360Bn of Retail Client Assets across Platform with an Iconic Brand ~5.2MM Client Accounts (1) Digital Banking Capabilities $39Bn of Deposits; additional $18Bn of Including Checki
Slide 7: E*TRADE Adds Cutting Edge Technology to All Wealth Management Channels
2 Combination With E*TRADE Adds Cutting Edge Technology Portfolio to All Wealth Management Channels Financial Advisors Workplace Self-Directed Public Equity Self-Directed Goals Based Planning Administration Platform Brokerage Accounts Private Company Digital Checking and Next Best Action Management
Slide 8: Combination Services Full Spectrum of Wealth Across All Channels
3 Combination Services Full Spectrum of Wealth Across All Channels of Client Acquisition… Financial Advisors (1) Workplace (2) Self-Directed (3) #1 Top 3 Top 3 3MM+ ~4.6MM ~5.2MM Client Relationships Stock Plan Participants Client Accounts $2.7Tn ~$580Bn ~$360Bn Combined Stock Plan Client Assets Ret
Slide 9: ...and a Leading Position in Workplace
3 …and a Leading Position in Workplace Equity Edge Pro Forma Online Total Stock Plan Balances (1) ~$280Bn ~$300Bn ~$580Bn Total Participants (2) ~2.7MM ~1.9MM ~4.6MM Corporate Plans (3) ~3,900 ~830 ~4,730 Annual Stock Plan Proceeds (4) ~$27Bn ~$48Bn ~$75Bn The End Notes are an integral part of this
Slide 10: Fills in Product and Service Gaps for Both Clients
4 Immediately Fills in Product and Service Gaps for Both E*TRADE and Morgan Stanley Clients Morgan Stanley E*TRADE Pro Forma Full Service Advisory Wealth Research Management Asset Management Products Virtual Advisor Equities, ETFs, and Mutual Funds Self-Directed Fixed Income Brokerage De
Slide 11: Combination Accelerates Growth Initiatives
5 Combination Accelerates Growth Initiatives Morgan Stanley Characteristics E*TRADE Characteristics Next Generation Established High Rate of Client Acquisition Deep Relationships 850K+ New Accounts Over 5 Years (1) Very Wealthy Pipeline of Emerging Wealth Financial Advisory Services, Self-Directed,
Slide 12: Technology Penetration Will Help Capture Greater Share of Wealth
5 Technology Penetration and Service Capabilities Will Help Capture Greater Share of Wealth Growth Opportunities to Morgan Stanley (1) E*TRADE (2) Pro Forma Capture Assets Client Assets Held Away ~$7.3+ Deepen relationships with ($Tn) $3.2+ E*TRADE clients with attractive demographics Accelerate
Slide 13: Opportunity for Significant Cost Synergies
6 Opportunity for Significant Cost Synergies Pre-Tax Run Rate Cost Synergies to Be Realized Over 3 Years (1) Duplicative Platforms / Systems Infrastructure / Data Center Savings $400MM+ Shared Services Consolidation Real Estate Optimization Operational Efficiency From Scale Post-closing Restructurin
Slide 14: Significant Funding Synergies and Enhanced Deposit Profile
6 Combination Generates Significant Funding Synergies and Enhanced Deposit Profile Morgan Stanley E*TRADE (2) Pro Forma Total Deposits and Cost of Deposits (1) 21% 17% 31% 15% $190Bn (105bps) + $56Bn (34bps) = 13% ~$247Bn (89bps) 64% 8% 61% 70% Bank Deposit Program Savings Deposits Time Deposits Off
Slide 15: Opportunity for Significant Cost and Funding Synergies
6 Opportunity for Significant Cost and Funding Synergies Cost Synergies $400MM+ Funding Synergies $150MM+ Total Cost and Funding $550MM+ Synergies (1) Pre-Tax Run Rate Synergies The End Notes are an integral part of this Presentation. See slides 19-22 at the back of this presentation for information
Slide 16: Transaction Summary
Transaction Summary • $13 billion transaction value; 100% stock consideration Key Transaction Terms • Fixed exchange ratio of 1.0432 per Morgan Stanley share; implies $58.74 per share value based on Morgan Stanley’s closing price of $56.31 on February 19, 2020 • One member of E*TRADE Board to be add
Slide 17: Pro Forma Summary Financial Impact
Pro Forma Summary Financial Impact Wealth Management (1) Morgan Stanley • Accretive once fully phased-in Client Assets $3.1Tn estimated cost and funding EPS (2) synergies are realized Client Relationships • Incremental synergies provide And Accounts ~8.2MM upside to future EPS Stock Plan • 30bps+ ac
Slide 18: Strategic Rationale
Strategic Rationale 1 Accelerates Business Mix Towards Balance Sheet Light and More Durable Sources of Revenue (1) 2 Leverages Dynamic Tech-Driven Company with Iconic Brand, Providing Access to the Next Generation 3 Services the Full Spectrum of Wealth Through Advisory, Workplace, and Direct Channel
Slide 19: End Notes
End Notes These notes refer to the financial metrics and/or defined term presented on Slide 4 1. Balance Sheet Light, as it relates to the Morgan Stanley Wealth Management segment, refers to a lower Risk Weighted Assets (‘RWAs’) intensity. Durable Sources of Revenues, as it relates to the Morgan Sta
Slide 20: End Notes
End Notes These notes refer to the financial metrics and/or defined term presented on Slide 8 1. Position in Financial Advisory represents estimated client assets based on internal analysis aggregated for Morgan Stanley and the following peers, per company filings: Bank of America, Wells Fargo and U
Slide 21: End Notes
End Notes These notes refer to the financial metrics and/or defined term presented on Slide 10 1. Current Morgan Stanley Digital Banking offering is through the broker-dealer entity and not through Morgan Stanley bank entities. These notes refer to the financial metrics and/or defined term presented
Slide 22: End Notes
End Notes These notes refer to the financial metrics and/or defined term presented on Slide 15 1. Total Cost and Funding Synergies are Morgan Stanley estimates. Estimated cost synergies are phased in over three years, and estimated funding synergies are phased in over two years, from the closing dat
Slide 23: The Next Strategic Step in Our Transformation
The Next Strategic Step in Our Transformation February 20, 2020
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