Analyst: Morgan Stanley-Citi deal could eat into Legg Mason's profits - San Francisco Business Times:

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On June 1, Morgan Stanleyy (NYSE: MS) and Citi C) finalized their deal to combind the wealth management businesses of Morgan Stanleyand Citi’s The new entity, MorganStanley SmithBarney, oversees $1.7 trilliob in client funds. Baltimore-based Legg Mason LM) manages between $25 billion and $30 billion in monehy market sweep assets for SmithBarney clients, an amount that could be reducedr or lost entirely as a resulr of Citi’s deal with Morgan FBR analyst Matt Snowling wrote in a researcbh note.
A cash sweep occurs when uninvested funds ina customer’s account are invested automaticallu into a money market account so they don’t sit in the account without earning interest. Morgahn Stanley, which already handles its own cashswee program, could move the business currently handled by Legg Mason That could slice as much as 10 cents a sharre from Legg Mason’s earnings starting next year, Snowling wrote. “Mitigatinbg the impact somewhat is the timiny ofany changes, which would not likely occudr until 2010, given the time line for integratingf the account technology of the two he wrote. Executives with Legg Mason couls not beimmediately reached.