IT integration hampers Morgan Stanley-Citi joint venture

Merged brokerages will delay the offering of full services due to integration complexity

Integrating the IT at Citi and Morgan Stanley's brokerages has proved complex

Citigroup and Morgan Stanley’s merged brokerages will take up to two years to reap the full benefit of the joint venture as the complexity of IT systems is hampering the integration, according to reports.

Earlier this year, Citi agreed to merge its Smith Barney brokerage with Morgan Stanley's wealth management unit to form the joint venture, which aims to generate yearly revenues of about $14bn (£8.5bn).

But issues in the integration process mean that financial advisers in both banks will be unable to access their capital markets products. Sources close to the venture told The Financial Times that the joint venture’s aim was to provide brokers with a pool of capital markets products from both firms by year-end, with a two-year target for the full integration.

According to The FT, a temporary arrangement in place until the integration is complete will see bankers at Citi only able to sell its bond issues through 10,500 Smith Barney brokers. A similar set up applies to Morgan Stanley, which has 8,000 financial advisers.

Despite the long integration process ahead, the firms have reportedly claimed that the project for joining IT systems is ahead of schedule as the deal was completed ahead of its expected target of completion in the third quarter of the year.