E*Trade in sale talks - report

E*Trade in sale talks - report

Troubled online brokerage E*Trade is reported to be in merger talks with rival outfits TD Ameritrade and Charles Schwab.

According to a report by CNBC, which cites people familiar with the situation, New York-based E*Trade is speaking to rival firms about a sale of the entire company or just its brokerage operations.

The report states that there is plenty of interest and some momentum behind the talks but the "key issue" is what to do with E-Trade's banking unit, which has been hit badly by the US mortgage market crisis.

One deal under consideration would involve TD Ameritrade buying E-Trade's brokerage operations, with its main shareholder, Toronto-Dominion Bank, taking over control of E*Trade's banking unit, says the CNBC report.

E*Trade shares have risen sharply this week on the back of the speculation.

The stock dived earlier this month after a a Citi analyst downgraded E*Trade to 'sell' and warned of a potential bankruptcy risk after the online broker reported news of further mortgage-related losses, the withdrawal of earnings guidance and an SEC investigation into its capital markets business.

Banc of America analysts also cut their price targets for E*Trade after the broker released a statement saying it expects further write-downs on its $3 billion asset-backed securities portfolio, which weren't taken into account when the firm updated its 2007 earnings outlook on 17th October.

As a result E*Trade's management said it was "no longer beneficial to provide earnings expectations for the remainder of the year".

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