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NEW YORK – Despite previous signals that it would spin-off its Discover division, John Mack, new CEO of Morgan Stanley and the Morgan Stanley Board, have decided to retain the Discover card brand. The bank had previously signaled that it would seek to spin off Discover and focus instead on core businesses. “The Board of Directors has decided, based on the results of a recently completed in-depth analysis, that it is in the best interests of Morgan Stanley’s shareholders to retain Discover Financial Services,” the bank said. “The Board concluded that Discover can create value for Morgan Stanley shareholders and realize its growth potential as an asset of Morgan Stanley.” “Having looked closely at the Discover business,” Mr. Mack said, “the Board and I are convinced that Discover is not only a strong business, but also an attractive asset for Morgan Stanley. It is a unique, successful franchise with growth opportunities that gives Morgan Stanley a consistent stream of stable, high-quality earnings and substantial cash flow, diversifies the Company’s earnings and broadens our scale and capital base.” The bank declined to take any further questions about its decision, pointing out that the previous decision to spin off the card brand had not been finalized. The fate of Discover is of particular interest to credit unions because the card brand purchased the Pulse EFT Association, which has many credit union members, in early 2005.

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