THE widely anticipated consolidation of Australia's stockbroking began yesterday with Morgan Stanley's acquisition of Citi Group's retail advisory business. 

The deal, which will see New York-based Morgan Stanley pay US$2.7 ($3.34) billion for a 51 per cent controlling stake in Citi's private client business, will help the beleaguered Citi rebuild its other operations. 

Mallesons Stephen Jaques has advised Citi on the global joint venture, which will see the retail broking businesses in the US, Europe and Australasia to form Morgan Stanley Smith Barney. Freehills, meanwhile, acted for Morgan Stanley.

The Mallesons team advised on the Australian aspects of transferring Citi's margin lending business into the join venture. It also advised on regulatory issues, and worked on obtaining Foreign Investment Review Board approval, which Mallesons' special counsel Malcolm Brennan specifically worked on.

Lead partner on the deal, Joshua Cole, said these types of deal, which involve the coordination of legal teams across a number of jurisdictions, are becoming more common as the economy worsens. 

"The [global financial crisis] has given rise to a number of global transactions which require the crafting of some complex arrangements in very tight timeframes and this one was no exception,” Cole said.

“Our team, who worked with a number of New York and international firms, had to co-ordinate the interaction of regulatory regimes across a range of jurisdictions throughout Europe, Asia and the Americas," he said. 

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Partners Greg Golding and Andrew Gray, from the firm's M&A practice, also worked on the deal. Simone Menz joined the team from the property practice, and senior associate Stuart Courtney joined from the tax group.