Why a China Deal Didn't Work Out for Morgan Stanley

John Mack turned to China for support in his most desperate hour and ended up getting in bed with the Japanese.

Days of talks with China's $200 billion sovereign-wealth fund to boost its minority stake in Morgan Stanley ended when the U.S. investment bank announced a deal Monday to sell a 10% to 20% stake to Japan's Mitsubishi UFJ Financial Group.

The deal with China Investment Corp. foundered on a number of issues, says a person close to the deal, including an inability to agree on terms and concerns over regulatory approval in both China and the U.S. At a time when Morgan Stanley and other institutions may not have the luxury of waiting another day to escape spooked investors, waiting around for approvals from Beijing is a deal breaker.

A big deal like that would need approval from China's highest administrative body, the State Council. Getting such approvals requires a substantial amount of effort and consensus building in the halls of Beijing and Chinese institutions are ill-suited to provide rapid reactions, especially when Beijing has been burned on past deals with Wall Street firms seeking its money. Bureaucrats in Beijing have withheld approval for government infrastructure lender China Development Bank to cut two major deals this year: a capital infusion for Citigroup and a takeover of Germany's Dresdner Bank.

China Investment Corp. already owns a nearly 10% chunk of Morgan Stanley and would need the U.S. Federal Reserve and Treasury Department to back a plan to take more. The value of that stake has dropped markedly since CIC paid $5.6 billion dollars for it in December last year. A further investment would certainly face criticism for throwing good money after bad and helping prop up Wall Street, while ignoring pressing problems at home.

China's stock market has been among the world's worst performers this year and its legions of small investors have clamored for the government to throw them a lifeline. Last week, the sovereign-wealth fund responded, saying it would commit an unspecified amount of capital to increase its holdings of Chinese state banks by purchasing shares on the open market. That spurred a major rally in local equity markets on Friday and Monday. Those kinds of moves are more politically palpable than helping save John Mack and legions of Wall Street bankers

摩根士丹利(Morgan Stanley)首席执行长麦晋桁(John Mack)在最绝望的时候到中国人那里找救援，最后却上了日本人的床。

摩根士丹利周一宣布将10%至20%的股份卖给日本的三菱UFJ金融集团(MUFG)。这意味着与中国2,000亿美元主权财富基金关于增持股份的谈判宣告结束。

据知情人士，摩根士丹利与中国投资有限责任公司(China Investment Corp., 简称：中投公司)的交易未果有几个原因，包括未能就一些条件达成共识，以及对中国和美国监管机构审批的担忧。面对恐慌的投资者，摩根士丹利和其他金融机构或许已没有再等一天的自由，而北京方面迟迟未到的批准最终让这笔交易落空。

这样大的一笔交易将需要中国政府最高机构国务院的批准。而要得到这样的批准需要做出巨大努力，在中国政府各个部门之间铸造共识，但中国的机构还不适应作出快速反应。特别是北京过去向华尔街公司注资的几笔交易都赔了钱。今年以来，北京的官僚们没有批准中国发展银行(China Development Bank)提请的两笔大交易：向花旗集团(Citigroup)注资，以及接管德国的德累斯顿银行(Dresdner Bank)。

中投公司已经拥有摩根士丹利近10%的股份，如果增加持股将需要美国联邦储备委员会和美国财政部的支持。中投公司去年12月在摩根士丹利投资了56亿美元，现在这一投资已经大大缩水。如果追加投资，中投必将面临诸如拿钱打水漂、扶助华尔街却对国内亟待解决的问题置之不理等批评。

中国股市是今年全球市场下跌幅度最大的之一，很多散户都迫切希望政府救市。上周，中投做出了回应，其旗下的子公司宣布将买入三家国有银行的股票。这个消息令中国股市周五和周一飙升。这样的举动在政治上的意义可比救助麦晋桁和华尔街上的一干银行家们大多了。