Morgan Stanley, one of the world’s biggest property investors, is thought to be in merger talks with Wachovia to insulate itself from the banking crisis.
It is also in discussions with one of its leading shareholders, the China Investment Corporation.
The talks follow a slide in Morgan Stanley’s share price yesterday, which closed down 26% in a sign of the dwindling confidence in the US bank.
The other remaining large investment bank on Wall Street, Goldman Sachs, saw its shares close about 18% down.
Morgan Stanley’s moves towards a deal follow a turbulent week in the global financial markets, which began with the collapse of Lehman Brothers.