Citigroup and Morgan Stanley agreed to merge their brokerage units, according to a joint statement on Tuesday.

Under the deal, Citigroup's retail brokerage Smith Barney will combine with Morgan Stanley while the latter is paying Citigroup US$2.7 billion in cash.

The statement said Morgan Stanley will own a 51-percent stake in the joint venture while Citigroup will have the remaining 49 percent.

The new venture is expected to become the industry's leading wealth management business with over 20,000 brokers and financial advisors, US$1.7 trillion in client assets and 6.8 million households around the world.

During the recent credit crisis, the troubled banking giant Citigroup is under pressure to shore up its finances, especially after taking billions of bailout money from the US government.

The deal will grant Citigroup a pretax gain of US$9.5 billion or US$5.8 billion after taxes.

(Xinhua News Agency January 14, 2009)