The firm isn't the only one courting that population. Bank of America and Wells Fargo have laid out plans to offer more products to their wealthiest clients and turn mortgage customers into patrons of their brokerage businesses.

"Everyone's beating each other up to get the same clients, which makes success in that area even more complicated in a constrained revenue environment," Burnell said. "The banks are now clearly focusing a lot more time and effort on keeping their more profitable customers, and that may be another cloud on the horizon for companies like Morgan Stanley."

'Game Theory'

Under terms of the agreement between the joint-venture partners, the gap between the banks' estimates will be divided into thirds. If Perella's estimate falls in the middle portion, the transaction price will be set at that level. If it's in the upper or lower third, the final price will be the average of Perella's estimate and the closest bank estimate, according to a procedure Morgan Stanley outlined in a May filing.

The structure of the process was supposed to dissuade either side from tendering an extreme estimate of fair value. The theory was that if one side submitted an outlier while the other offered an estimate close to what the outside appraiser would view as fair value, the former could end up with a price more than $100 million further away from its projection than the outside appraiser's decision.

Instead, each side may have wagered that the other would propose a value strongly in its own favor and that the outside appraiser would split the difference.

'Valuation Disconnect'

"In our view, part of this valuation disconnect is 'game theory' such that a wider range makes it more likely that the value will fall into the middle third," Richard Ramsden, an analyst at Goldman Sachs, wrote in a note last month.

Ramsden pegged the value at about $13 billion. That was the average of a cash-flow analysis that calculated the unit was worth $15.3 billion assuming 7 percent annual earnings growth and an approach that compared earnings multiples of Stifel and Raymond James, which suggested a $10.6 billion price tag for the entire brokerage. Ramsden's cash-flow analysis showed that a valuation of $9 billion implies that profits would shrink by 12 percent a year over the long term.

KBW's Konrad said he estimates the unit is worth between $14 billion and $14.5 billion. Burnell pegged it at the "high- teens" billion range. In January, Credit Suisse's Howard Chen estimated the value of the brokerage at $15 billion. David Trone, a JMP Securities LLC analyst in New York, said in a note the following month that the unit is worth $24 billion.

Appraisal Drama

"We don't have a lot of disclosure on the joint venture, so everyone's numbers are a little bit back of the envelope, best we can do," Konrad said. "Both sides are kind of setting up to where the middle third is a little more acceptable. If you look at the middle between the two, that comes in around $16 billion valuation for the total company."

Such a valuation could still lead to a pretax charge of more than $1 billion for Citigroup. Jason Goldberg, a Barclays Plc analyst in New York, said the writedown may reach almost $6 billion, the latest significant loss at its Citi Holdings division, which houses assets the bank is selling or winding down. Pandit has been trying to convince investors that Citi Holdings will be less of a drag on the firm's results.