Smith Barney is on the move yet again.

Talks between Citigroup Inc. (C) to sell Morgan Stanley (MS) a 51% stake in its retail brokerage unit is just another potential deal for a firm with a long history of mergers, which have occurred since its inception.

Analysts and industry observers say the joint venture would give Smith Barney's clients access to initial public offerings, research and other investment products from Morgan Stanley and vice versa. In addition, Smith Barney will no longer be directly linked to a retail bank, but would still be able to generate deposits.

Morgan Stanley is pushing to garner deposits after recently becoming a bank holding company. What Smith Barney's relationship would be with its new owners, while jointly owned by Citi and Morgan Stanley, which both want to generate deposits, is uncertain.

And with terms of the possible transaction and structure of the firm yet to be determined, some brokers at competing firms don't see an immediate allure to the potential entity.

"I don't have any interest in Smith Barney/Morgan Stanley," said a Merrill Lynch & Co. broker in the northeast U.S. "The last thing I want to do is jump into more turmoil," the broker said.

 
   More Offerings?

While observers aren't sure exactly how a Smith Barney/Morgan Stanley entity will be run, many agree that the transaction would enhance product offerings to clients of both firms.

"If you think about it from the Smith Barney retail customer's perspective, they would be getting double the options," said Fox-Pitt Kelton analyst David Trone.

Trone said that clients would gain access to alternative investments including derivatives, real estate funds and private equity funds, through the prime brokerage operations of both firms.

 
   Another Deal?

A change in affiliation would be nothing new for Smith Barney. The original Smith Barney & Co. was formed 71 years ago between the merger of Charles D. Barney & Co., which was founded in 1873 by a young broker and Edward B. Smith & Co., a young investment banker who founded his firm in 1892.

In the late 1980s, the firm was acquired by Primerica Corp., a financial services firm, which in the summer of 1993 bought the retail brokerage and asset management operations of Shearson Lehman Brothers and combined them with Smith Barney. A few months later in December, Smith Barney became a subsidiary ofTravelersGroup becauseTravelers acquired Primerica.

In 1997, Smith Barney, which was the brokerage arm ofTravelers Group at the time, was combined with Salomon Inc. In 2003, the Salomon name disappeared as corporate and investment banking activities were restructured to fall under the umbrella of the Citigroup. Smith Barney became the wealth management and equity research functions group.

While the structure of the joint venture isn't clear yet, some industry experts believe that Smith Barney will fall under Morgan Stanley's control, pitting the firm once again under the brokerage umbrella.

Carri Degenhardt-Burke, of Degenhardt Consulting, said that a Morgan Stanley/Smith Barney combination would be "the new old Merrill Lynch" - referring to a brokerage firm not attached to a large retail bank.

In recent weeks, the traditional wirehouse model has evaporated as Bank of America Corp. (BAC) completed its acquisition of Merrill Lynch & Co. and Wells Fargo & Co. (WFC), bought Wachovia Corp.

"Despite the size (of Morgan Stanley/Smith Barney), there is still less red tape that needs to be cut through," Degenhardt said.

Yet, it's unclear how Morgan Stanley's recent transformation to a bank holding company could affect the roughly 11,000 brokers from Smith Barney. Morgan Stanley has said it will use its brokerage force to raise deposits from new and existing clients.

"That's the part where they will have to nail down a scheme to make sure each side benefits from client cash and deposits," Trone said, adding that maybe the firms could employ a 50-50 split.

 
   Will Brokers Join?

A marriage between Morgan Stanley and Smith Barney is sure to attract the attention of financial advisers at competing firms, given the surge in broker movement over the past year. Financial advisers are looking to switch firms more than ever before as plunging company stock prices have reduced the incentive for them to stay at their firms. Stock is a key component of brokers' deferred compensation.

Some say that a Morgan Stanley/Smith Barney entity would carry more weight with brokers because it isn't owned by a retail bank such as Bank of America or Wells Fargo.

There's a part of the brokerage industry that likes being part of a broker-focused firm, where decisions are made based on what's in the best interest of the financial advisers," said Andrew Tasnady, compensation consultant with Tasnady Associates. "The Morgan Stanley-Smith Barney combination would be the only large place like that left."

He said that could make very traditional brokers, like many of those at Merrill, attracted to the firm.

Michael Campbell, chief executive and president of Dominick & Dominick, said that "given the time it will take to consolidate branches, management and platforms, brokers may not look to join Morgan Stanley/Smith Barney for awhile."

A Merrill Lynch broker wouldn't want to join the firm now, and then have to deal with the possibility of the branch closing or management changes, he said.

Matthew Bienfang, senior research director of brokerage and wealth management at research firm TowerGroup, said "I'm not so sure if I were a Merrill guy I'd be looking to go that environment. They will have to wait and prove to me that (joint venture) is going to work." Smith Barney and Morgan Stanley declined to comment.

Shares of Citigroup recently traded up 18 cents, or 3.2%, at $5.79. Morgan Stanley was up 24 cents, or 1.1%, at $18.99,

-Brett Philbin, Dow Jones Newswires; 201-938-5393; brett.philbin@dowjones.com

-By Jessica Papini, Dow Jones Newswires; 201-938-2437; jessica.papini@dowjones.com

(Annie Gasparro and Matthias Rieker contributed to this report.)

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