E*Trade sells Canadian unit to Scotiabank for $442 million

E*Trade sells Canadian unit to Scotiabank for $442 million

Online discount brokerage E*Trade has agreed to sell its Canadian operations to Scotiabank in a deal worth US$442 million.

E*Trade says the deal, expected to close in the third quarter subject to regulatory approval, along with the return of related capital will generate around $511 million in net cash proceeds.

The sale is part of the struggling firm's turnaround plan as it looks to sell off non-core assets and cut costs by $360 million during 2008.

In January the company posted a massive fourth quarter net loss of $1.7 billion compared with net income of $176.9 million a year earlier, after getting badly burned by the US mortgage crisis last year.

In May E*Trade revealed plans to sell its 43.85% stake in Indian brokerage IL&FS Investsmart to HSBC, in a deal expected to raise $145 million.

Donald Layton, chairman and CEO, E*Trade, says: "Combined with the other planned non-core asset sales announced this year, we've generated more than $700 million in proceeds in a shareholder-friendly manner. With this transaction signed, we re-affirm that our plans to access the capital markets are focused at this time upon the previously-announced debt-for-equity swaps."

Scotiabank says the acquisition of E*Trade Canada, which has around $4.7 billion in assets under administration and 190 employees, will double its footprint in the Canadian online investing market.

"Scotiabank's agreement to purchase E*Trade Canada demonstrates our commitment to pursuing opportunities to grow our wealth management business and drive revenue growth," says Rick Waugh, president and CEO, Scotiabank.

The bank says the deal builds on its acquisition last year of Canadian online brokerage boutique TradeFreedom Securities.

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