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Photo: Rafael Henrique/SOPA Images/LightRocket via Getty Images

Morgan Stanley is buying E*Trade Financial, the company known for helping everyday Americans manage their money, in a $13 billion all-stock deal, the investment bank said Thursday.

Why it matters: The deal signals Morgan Stanley's desire to bulk up in wealth management, a strong profit arm of its business model. As the WSJ notes, Wall Street banks have been looking for steadier sources of revenue, now that "postcrisis regulations and a long period of eerie calm in the markets" have taken a toll on profits.

The big picture: The deal, which is expected to close by year-end, is the largest by a major American bank since the financial crisis.

  • The acquisition of E*Trade will add more than 8 million customers — plus $3.1 trillion in client money — to Morgan Stanley's wealth management arm.
  • Morgan Stanley CEO James Gorman told CNBC that the deal opens a "new demographic" of clients for the storied firm that has historically catered to the nation's most wealthy.

What they're saying: "Wall Street banks continue to covet Main Street customers," says Greg Bride, chief financial analyst at Bankrate.

  • One example is Morgan Stanley's arch-rival Goldman Sachs, which is dedicated to growing its digital consumer bank, Marcus, and serving the same demographic.

By the numbers: The deal is expected to boost the wealth management division's profit contribution to 57% — up from the 26% the business contributed in 2010, according to a company press release.

The bottom line: E*Trade has been in a state of limbo since November, when its major competitors — Charles Schwab Corp. and TD Ameritrade — merged, raising questions about whether E*Trade would be able to survive on its own, per the Journal.

  • Morgan Stanley will pay $58.74 per share for E*Trade — a 30% premium from where shares were trading before the deal was announced.

Go deeper: Six of the biggest U.S. banks have weaknesses in their crisis plans

Go deeper

Coronavirus has inflamed global inequality

Illustration: Aïda Amer/Axios

History will likely remember the pandemic as the "first time since records began that inequality rose in virtually every country on earth at the same time." That's the verdict from Oxfam's inequality report covering the year 2020 — a terrible year that hit the poorest, hardest across the planet.

Why it matters: The world's poorest were already in a race against time, facing down an existential risk in the form of global climate change. The coronavirus pandemic could set global poverty reduction back as much as a full decade, according to the World Bank.

2 hours ago - Politics & Policy

Kevin McCarthy's rude awakening

House Minority Leader Kevin McCarthy. Photo: Mark Wilson/Getty Images

Kevin McCarthy is learning you can get torched when you try to make everyone happy, especially after an insurrection.

Why it matters: The House Republican leader had been hoping to use this year to build toward taking the majority in 2022, but his efforts to bridge intra-party divisiveness over the Capitol siege have him taking heat from every direction, eroding his stature both with the public and within his party.

The next big political war: redistricting

Illustration: Aïda Amer/Axios

Democrats are preparing a mix of tech and legal strategies to combat expected gerrymandering by Republicans, who are planning to go on legal offense themselves.

Why it matters: Democrats failed to regain a single state legislature on Election Day, while Republicans upped their control to 30 states' Houses and Senates. In the majority of states, legislatures draw new congressional district lines, which can boost a party's candidates for the next decade.