Morgan Stanley plans to sell as much as 20% of itself to Mitsubishi UFJ Financial Group Inc., Japan's largest banking company, to shore up capital as it prepares to convert from a securities firm to a banking company.

Mitsubishi UFJ said Monday that it has agreed to buy 10% to 20% of Morgan Stanley for up to $8.4 billion, and that it will start due diligence before determining a final price.

John Mack, Morgan Stanley's chairman and chief executive officer, is trying to keep his company independent after Lehman Brothers filed for bankruptcy protection and Merrill Lynch & Co. Inc. agreed to sell itself to Bank of America Corp.

Morgan Stanley and Goldman Sachs Group Inc. won approval Sunday from the Federal Reserve Board to become bank holding companies.

"Mitsubishi UFJ would be a valuable partner as we transition to a bank holding company and build our bank services and deposit base," Mr. Mack said in a press release. "This alliance also would build on Morgan Stanley's deep ties and market leadership in Japan and throughout Asia."

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