New York  - Japan's Mitsubishi UFJ Financial Group will acquire a 21-per-cent stake in Morgan Stanley as the financial crisis has hurt confidence in US banks and hampered liquidity, the firms announced Monday.

The largest Japanese financial group will pay 9 billion dollars to become the primary shareholder. The cash infusion comes amid a credit crunch that has brought turmoil to world financial markets and prompted a 700-billion-dollar bailout deal making its way through the US Congress.

Morgan Stanley along with Goldman Sachs last week became bank holding companies, agreeing to submit themselves to tighter regulation than they had as investment banks. The companies were the last two remaining US investment banks after the larger financial turmoil saw the bankruptcy of rival Lehman Brothers and the acquisition of Merrill Lynch by Bank of America.

Mitsubishi will acquire 9.9 per cent of Morgan Stanley's common stock for 25.25 dollars per share and the rest will come in the form of preferred stock for 31.25 dollars per share, the companies said in a statement.

The announcement follows a commitment made last week for Mitsubishi to acquire about 20 per cent of Morgan Stanley.

The news pushed down shares of both companies in morning trading. (dpa)