Significant IT systems integration challenges at Citigroup and Morgan Stanley could delay the financial benefits of a brokerage joint venture by two years.
Until the systems are integrated, the Morgan Stanley Smith Barney business will not be able to sell the full planned range of products to its clients, the Financial Times reported.
Sources close to the $14 billion (£8.5 billion) a year brokerage unit told the newspaper it would provide a large range of capital markets products to brokers by the end of the year. But it will take up to two years to fully complete the integration.
“People are working extremely hard to put all the components in place, but it is going to take some time,” a spokesperson at the venture said.
Executives said the integration was ahead of schedule, because the deal to form the unit was closed early at the start of the month. Morgan Stanley has 8,000 brokers and Smith Barney has 10,500.
Elsewhere, Citigroup is attempting to carve £1.5 billion a year out of IT costs.
But when, in January, it announced it was siphoning off less profitable divisions, analysts warned that years of IT integration work - conducted by Citigroup following the merger of Citicorp and Travelers Group in 1998 - could be undone. Citigroup denied this was the case.