MUFG and Morgan Stanley announced the outline of the deal last week but had yet to work out the exact level of investment.

The Japanese megabank said in a statement it would pay US$3 billion for common stock in Morgan Stanley and another US$6 billion for convertible preferred stock.

MUFG and Morgan Stanley will come up with a 'concrete strategy' by June 30 next year for a global business alliance, it said, with the Japanese bank sending a director to the Wall Street firm's board.

The US financial sector is embroiled in its worst upheaval since the Great Depression on a mountain of liabilities from high-risk subprime loans, leading the US government to draft a 700 billion-dollar bailout.

Japanese financial institutions have weathered the global financial crisis better than many of their Western peers thanks to cautious lending practices following a separate bad loan crisis a decade ago in Asia's largest economy.

Japan's largest brokerage Nomura Holdings has also seized the opportunity of Wall Street's meltdown to buy the Asian, European and Middle Eastern operations of collapsed Wall Street titan Lehman Brothers.

Bank of Japan deputy governor Kiyohiko Nishimura told a news conference earlier Monday that Japanese banks' expansion was 'desirable' if it boosted the financial companies' earnings and helped stabilise global markets. -- AFP