Morgan Stanley in merger talks with Wachovia Corp: reports

London/New York , Sep 18 : Global financial services firm Morgan Stanley is in preliminary merger talks with retail and mortgage bank Wachovia Corporation, media reports say.

Morgan Stanley, one of the two major Wall Street banks left standing, is also exploring other deals in an effort to avoid becoming the next victim of credit crunch, UK daily Financial Times reported.

Wachovia's approach to Morgan Stanley came after its shares plunged and the cost of insuring its debt rose sharply, a sign of waning investors' confidence, the report stated.

In another report by US-based Wall Street Journal, commercial banks such as Wachovia were perceived as more stable, creating strong incentive for investment banks to link up with them, as Merrill Lynch did earlier this week with Bank of America.

The WSJ report further stated that a seventh straight decline in the Morgan Stanley's share price on Wednesday had sent the stock to its lowest level since 1998.

After a harrowing day, Morgan Stanley's shares finished down 24 per cent at USD 21.75 on the US bourse.

Meanwhile, The New York Times has reported that Morgan Stanley's chief executive, John J Mack, had received a telephone call from Wachovia expressing interest in the Wall Street bank."

Other banks have also expressed interest in Morgan Stanley, which is considering various options, the NYT report stated adding the talks with Wachovia were preliminary and no deal may emerge.

Wachovia Corporation is one of the largest diversified financial services companies of US, with assets of USD 812.4 billion and marketcap of USD 33.5 billion on June 30.