BANKS:MORGAN STANLEY and Goldman Sachs Group, the two largest remaining independent US investment banks, may add to the $81 billion of financial services deals unveiled during the past week as they morph into banks.

Morgan Stanley plans to sell as much as a 20 per cent stake for $8.4 billion to Mitsubishi UFJ Financial, Japan's largest bank, to shore up capital, while Goldman Sachs said its new status as a bank would help it purchase assets.

Regional banks probably will become "lunch" for larger institutions, JPMorgan Chase analyst Steven Alexopoulos said yesterday.

"We are seeing deals that are highly opportunistic and speedily arranged where targets are distressed," said Marco Boschetti, co-head of global mergers and acquisitions at the Towers Perrin consulting firm in London.

Goldman Sachs, granted permission over the weekend to transform into a bank holding company, may raise capital to buy assets if it finds the right opportunities, said a spokesman.

"If we see assets that are attractive we might raise capital in order to be able to acquire them," he said yesterday, adding that Goldman had "no immediate plans to raise capital".

Goldman, now the sixth largest US bank by market value, is more interested in buying deposits than in buying entire banks, according to a person familiar with the firm's thinking. The firm sees opportunities to buy deposits in the wholesale market and also to buy deposits of failed institutions.

Morgan Stanley, which already has more than 3 million retail brokerage accounts, said yesterday it planned to "pursue initiatives to expand the retail banking services it offers its retail clients and build a stable base of core deposits". - ( Bloomberg)