“The E-Trade folks I think have handled this brilliantly. They’ve had very little disruptions in their platform, and this is exactly the kind of reason why we wanted to buy this business,” Gorman said on “Closing Bell.”
“This gives us world-class technology capability, and particularly as people now have learned to deal much more remotely, it will augment what we are doing with our financial advisors.”
The acquisition will help the bank’s revenues be less impacted by market moves, Gorman said.
“It provides more balance to our business model. It’s more wealth management revenue, it’s more stability, it’s less volatile than the core markets business,” Gorman said. “So net-net, I’m happier now that we did the deal when we did it.”
Morgan Stanley announced the deal, an all-stock transaction then valued at $13 billion, on Feb. 20, the day after the S&P 500 hit its current record high. The bank’s stock closed at $56.31 per share the day before the announcement and closed below $32 per share on Wednesday, a drop of more than 43%.
E-Trade’s stock is down nearly 29% over that period despite an initial pop after the deal was announced. The deal is expected to close in the fourth quarter, according to the original announcement.
“As both stocks have moved and would have moved post-crisis, I’m very comfortable with having done an all-stock deal,” Gorman said.
It took the S&P 500 just 22 trading days from its Feb. 19 record to fall 30%, the fastest such drop in history.
Gorman also said that he thinks the market has “seen the worst” of liquidity issues after the actions by the Federal Reserve and that 90% of the bank’s employees and contractors are working remotely due to the coronavirus.