The US investment bank has applied to relevant banking authorities and the economics ministry to acquire a ten per cent stake in Chinatrust, according to reports in local financial newspapers the Commercial Times and the Economic Daily.
Up to $610 million has been earmarked for investment, the reports added.
While Morgan Stanley did not comment on the deal, Chinatrust's chief strategy office did confirm that the firm has been holding negotiations over the sale of a stake with a number of "top tier private equity funds and hedge funds and commercial banks".
Reports of the sale follow Chinatrust's announcement that it has pared down its stake in domestic rival Mega Financial Holding Company by 3.9 per cent in order to comply with regulations.
Chinatrust is Taiwan's largest credit card issuer and fourth-largest financial services firm.