The firm, Morgan Stanley Smith Barney, has 6.8 million client households, and approximately $14 billion in projected revenues and has 18,500 advisors, according to a joint statement from Morgan Stanley and Citi.

The joint venture is 51 per cent owned by Morgan Stanley.

"Morgan Stanley Smith Barney perfectly complements Morgan Stanley's traditional leadership position in the global institutional markets," John Mack, chairman and chief executive of Morgan Stanley, said in a joint statement. He continued: "It is a clear industry leader that will be the premier choice for clients and high-quality financial advisors around the world, who will benefit from an unrivalled global platform, a vast array of products and services and the powerful intellectual capital that both firms bring to this venture."

"Citi benefits from this transaction by monetizing its investment in its wealth management business, while continuing to benefit from a multi-year earnings stream created by the larger firm,” Vikram Pandit, Citi’s CEO, said in the statement.

Both Morgan Stanley and Citi will access the joint venture for retail distribution and each firm's institutional businesses will continue to execute order flow from the joint venture.  At closing, Citi estimates it will recognise a pre-tax gain of approximately $10.9 billion, or approximately $6.6 billion on an after-tax basis, create close to an estimated $7.8 billion of tangible common equity and increase Citi's Tier 1 capital ratio by approximately 86 basis points on a pro forma basis as of 31 March.

Under the final terms of the agreement, Citi will transfer 100 per cent of its Smith Barney, Smith Barney Australia and Quilter retail units for a 49 per cent stake in the joint venture and an upfront cash payment of $2.75 billion.

Morgan Stanley will transfer 100 per cent of its Global Wealth Management business for a 51 per cent stake in the joint venture.  After year three, Morgan Stanley has the right to increase its stake in the joint venture, although Citi will continue to own a significant stake through at least year five, the statement added.