End of an era for Goldman Sachs and Morgan Stanley
AMERICA’S last two major investment banks have changed their status to bank holding companies.
The landmark move will enable Goldman Sachs and Morgan Stanley to take deposits from investors and raise funds by opening commercial banks.
The move, which is part of a monumental restructuring effort on Wall Street, will also give them access to Federal Reserve support.
The US government has announced a $700bn (£382bn) package to tackle the worst financial crisis for decades.
The last few weeks have seen dramatic and unexpected changes among banks, with Merrill Lynch being bought by Bank of America and Lehman Brothers filing for bankruptcy protection. Earlier this year, Bear Stearns was acquired by JP Morgan Chase.
Late last week a New York bankruptcy judge backed a $1.3bn (£700m) plan for Barclays to buy the core business of collapsed US investment bank Lehman Brothers.
The deal gives the UK bank ownership of Lehman’s Manhattan skyscraper – worth nearly $1bn – as well as responsibility for some 9,000 former staff.
Originally Barclays had agree to buy the bank’s North American investment banking and trading unit for $250m, as well as its New York headquarters and two data centres for $1.5bn.
However, the final figure was reduced after Lehman’s lawyers said new property valuations were less than expected and that the company’s trading accounts had shrunk.
