Smith Barney and Morgan Stanley May Merge Brokerage Units

Citigroup is in talks with Morgan Stanley about a sale of its Smith Barney brokerage and asset-management unit, according to news reports.

The deal would be structured as a joint venture, but would effectively be a long-term sale of Smith Barney to Morgan Stanley, CNBC reported.

Morgan Stanley would pay Citigroup $2 billion to $3 billion, resulting in Morgan holding the majority stake in the combined unit. Further, Morgan Stanley would have the option to increase its share to full ownership over a period of three to five years, according to the reports.

The move would create the nation’s largest single brokerage with approximately 22,000 brokers, Bloomberg reported, and would be tentatively called Morgan Stanley Smith Barney.