The country’s largest broker could well be in the making – with Citigroup almost all-set to sell its brokerage unit, Smith Barney, to Morgan Stanley! The prospective deal, in advanced stage of talks, would better position Morgan Stanley to reap benefits from the possible disruptions created by its competitor Bank Of America’s merger with Merrill Lynch last week.

In case the deal comes through, Morgan Stanley would become the majority owner of the new entity, controlling it with a 51 percent stake, with Citi expected to buy its 49 percent share over a 3 to 5 year period.

According to William Smith, president and senior portfolio manager at Smith Asset Management Inc, if the deal happens, it would be “the first step in the monetization of Citi.” Moreover, the joint venture of the two businesses would also help both Citigroup and Morgan Stanley slice costs.

Before attrition, the brokerage combo would have more than 23,000 financial advisers, making it the largest retail brokerage in the world, surpassing its closest rivals Bank of America Corp and Wells Fargo & Co.

In the opinion of Robert Ellis, senior vice president in the wealth management practice at a research-and-consulting firm Celent, the brokerage forces of Citigroup and Morgan Stanley are a better match culturally than the other recent mergers. The two firms have considerable overlap, as Ellis put it; “Just about every place you have a Smith Barney office or a Morgan Stanley office you have the other one. There is a lot of duplication.”