Founding Mitsubishi UFJ Morgan Stanley Securities (2010)

Turning crisis capital into an earning alliance

The core of this decision is that it carried the bond of capital, tied in the middle of a crisis, over into everyday business. The $9 billion of 2008 had the defensive colour of propping up a crumbling US investment bank. Two years later MUFG reconnected it to an offensive vessel — the reorganization of its domestic securities business — pairing Mitsubishi UFJ Securities, strong in retail, with Morgan Stanley, world-class in advisory and underwriting, on a single floor. Splitting leadership in voting rights between the two firms while aligning both to a 60/40 economic interest was a double design meant to raise, at once, an alliance of equals and a clear line of control.

That said, the price of binding two cultures into one company was not small. A derivative loss and a change of president in the first year laid bare, early on, how hard it is to govern a patched-together organization by a single discipline. Even so the alliance held, and came back as profit exceeding twice the sum invested. The capital held out to a partner at the bottom of the crisis turned, over more than a decade, into both a base in domestic securities and earning power abroad — the founding of Mitsubishi UFJ Morgan Stanley Securities shows a way of building an alliance that does not end with a single acquisition but ties capital and business together for the long run.