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Fed allows CIC to be second-largest foreign investor in Morgan Stanley

  • Maya Ando
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China Investment Corporation (CIC) has reportedly received the green light from the US Federal Reserve to take up to a 10% voting stake in Morgan Stanley, which would make the SWF the second-largest investor in the financial giant after Bank of Tokyo Mitsubishi UFJ, which holds a 20% stake.

CIC currently owns a 2.49% stake in the US bank, and has owned $5.58 billion worth Morgan Stanley securities since December 2007 which was converted into common shares earlier this month. After the share conversion, CIC's stake will increase to 9-10% of the company, with voting rights.

9-10% of which was converted into common shares earlier this month. CIC has also signed a purchase deal that allows it to acquire common stock with voting privileges as of August 2010.

Under current regulation, stakes of more than 5% taken by a foreign investor in a US bank must be approved by the Fed. In CIC's case, the Fed has ruled that the SWF has no intention of taking a controlling interest in Morgan Stanley’s operations, stating that CIC does not aim to "exercise or attempt to exercise a controlling influence" over Morgan Stanley's management.

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