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E*TRADE Buys Into Australia for $1.6M

Menlo Park, Calif.-based E*TRADE Group Inc. moved to expand its footprint overseas Monday with a $1.6 million deal to acquire a 7.5 percent equity stake -- about 6.4 million shares -- in E*TRADE Australia, which has increased customer accounts by 30 percent over the 12 months which ended in November. In that period, customer assets with E*TRADE Australia also rose 37.5 percent.

Under the deal, E*TRADE Australia will receive an exclusive royalty-free trademark license for electronic retail and institutional brokerage and other financial services in Australia and New Zealand. In exchange, E*TRADE Group said it will reduce operational costs through the transfer of its current technology maintenance and development obligation to E*TRADE Australia.

"This agreement demonstrates our confidence in the ability of E*TRADE Australia to advance E*TRADE's global brand in these key international markets," said Jarrett Lilien, chief brokerage officer and managing director Asia-Pacific and Latin America, E*TRADE Group. "The continuing success of E*TRADE Australia in meeting the needs of our retail households will be enhanced by the ability to now serve institutional clients under the E*TRADE brand, further integrating our global offering and enhancing revenue growth potential. Our commitment to our global growth strategy differentiates us from competitors who are withdrawing from many of these key markets."

E*TRADE Group said it plans to use the stake to pursue opportunities to cross-sell international accounts with U.S. dollar-denominated products. It also hopes to "generate greater share of wallet" from existing Australian retail account-holders by expanding trading access on cross border markets.