Morgan Stanley (MS) has been named as a primary financial adviser for any initial public offerings or divestitures for units of American International Group Inc. (AIG), according to documents released by the New York Federal Reserve.

The New York Fed, which has played a leading role in the government bailout of AIG, said it paid Morgan Stanley a $4 million advisory fee along with $2.5 million each quarter. The investment bank can also bill expenses related to work done on behalf of the failed insurer.

The central bank and Treasury Department have pumped more than $80 billion into AIG as part of a rescue package to avert bankruptcy for the insurer. AIG recently reduced its debt to the government by $26 billion in a deal that gave the Fed preferred shares in some of the insurer's businesses that might be spun off.

The New York Fed also said that Morgan Stanley will act as a financial adviser for any sale of AIG's stock or credit default swaps by the central bank.

Though the fees paid to Morgan Stanley might be small, the investment bank is positioned to reap significant fees once it helps to spin off AIG units.

AIG said last week it will speed up efforts to take its American Life Insurance Co. unit public and pursue a stock market listing in New York.

This comes even as AIG has recently engaged in talks with life insurer MetLife Inc. (MET) for its flagship international life insurance unit, which is known as Alico. The unit operates in 50 countries, from Japan to Europe.

In addition, AIG is also pursuing an initial public offering for AIG's American International Assurance. That IPO is widely expected to be in Hong Kong.

A sale or IPO of Alico and AIA would allow the Fed to sell its stakes in both companies and make some money.

-By Joe Bel Bruno, Dow Jones Newswires; 212-416-2469; joe.belbruno@dowjones.com

(Lavonne Kuykendall contributed to this report.)