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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

Mind the emissions gap

Illustration: Aïda Amer/Axios

The sprint to secure more stringent emissions reduction commitments ahead of the COP26 summit has petered out well short of the finish line, a new United Nations report out this morning concludes.

Driving the news: The "Emissions Gap" report offers a clear comparison between where emissions need to be to reach the Paris Agreement's goals, and where they actually are. It takes new and preexisting emissions pledges, called Nationally Determined Contributions (NDCs), into consideration.

Exclusive: Billionaires back new media firm to combat disinformation

Illustration: Aïda Amer/Axios

A new public benefit corporation backed by billionaires Reid Hoffman, George Soros, and others is launching Tuesday to fund new media companies and efforts that tackle disinformation.

Why it matters: Good Information Inc. aims to fund and scale businesses that cut through echo chambers with fact-based information. As part of its mission, it plans to invest in local news companies.

Dan Primack, author of Pro Rata
1 hour ago - Economy & Business

Scoop: Sequoia Capital just blew up the VC fund model

Illustration: Aïda Amer/Axios

Sequoia Capital, one of the world's oldest and most successful venture capital firms, is forming a single fund to hold all of its U.S. and European investments, including stakes in publicly-traded companies, Axios has learned.

Why it matters: Venture capital is the money of innovation, but the industry itself rarely innovates. This is a radical exception.