The Federal Reserve has granted approval for Japan's largest bank to purchase a stake in U.S. investment giant Morgan Stanley.

The Fed issued an order Monday saying that it had approved the request of Mitsubishi UFJ Financial Group Inc. to acquire up to 24.9 percent of the voting shares of Morgan Stanley.

Both Morgan Stanley and Goldman Sachs, the last two major independent investment banks in the United States, won approval last month from the Fed to convert to bank holding companies in an effort to withstand the severe financial storms raking Wall Street.