Morgan Stanley (NYSE:MS)
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5 Years : From Jul 2012 to Jul 2017
Morgan Stanley (MS) agreed to sell Saxon Mortgage Services, its mortgage-servicing unit, to Ocwen Financial Corp. (OCN), in a long-awaited deal that ends the investment bank's foray into subprime mortgage servicing.
The $59.3 million sale, including an estimated $1.4 billion in servicing advance receivables outstanding, marks the firm's latest effort to shed non-core operations and exit mortgage operations purchased prior to the financial crisis.
Morgan Stanley said the transaction won't have a material impact on its financial results.
The deal, scheduled to close in the first quarter of 2012, will reduce Morgan Stanley's firm-wide headcount by 1,200, according to a person familiar with the situation. The investment bank reported 62,648 employees as of Sept. 30.
The transaction will also modestly reduce Morgan Stanley's risk-weighted assets, an important measure used to calculate a bank's key capital ratios, free up capital and give the firm a liquidity boost, this person said.
Morgan Stanley bought Saxon in 2006 for $706 million, when banks were looking to boost their stakes in subprime lenders and servicers. But the housing market crash meant banks took large writedowns on many of these businesses.
For Ocwen, the deal is its latest move to beef up its mortgage-servicing operations. In September, Ocwen bought Goldman Sachs Group Inc.'s (GS) Litton Loan Servicing unit for $264 million.
Shares of Morgan Stanley closed up 0.8% at $17.15 and gained 0.2% in after-hours trading.
-By Brett Philbin, Dow Jones Newswires; 212-416-2173; firstname.lastname@example.org