Morgan Stanley ``urgently needs rescue'' by the US Treasury, which should buy preferred stock to help protect Mitsubishi UFJ Financial Group Inc.'s stake in the investment bank, George Soros wrote in the Financial Times.
 
The Treasury should match the Japanese company's injection by acquiring preferred stock that converts to shares at a price higher than Mitsubishi UFJ's purchase price, Soros wrote in the column, published today on the Web. Soros, the billionaire chairman of Soros Fund Management, wrote that the transaction would save the deal and help Morgan Stanley survive until the government can implement more sweeping reforms.
 
Morgan Stanley agreed to sell a 21% stake to Mitsubishi UFJ for about $US9 billion ($13.8 billion) in a deal that's scheduled for completion on Oct. 14. Mitsubishi UFJ, Japan's biggest bank, is buying $US6 billion in preferred stock and $US3 billion in common stock at a price of $US25.25 apiece.
 
Morgan Stanley's shares fell 60% this month, ending last week at $US9.68, giving the company a market value of $US10 billion and raising concern that Mitsubishi UFJ might pull out of the agreement. Morgan Stanley was the second-biggest US securities firm until last month, when it converted into the fifth-biggest bank holding company.

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