(Adds details, background; figures in U.S. dollars unless
NEW YORK/TORONTO, July 14 Bank of Nova Scotia
(BNS.TO) will expand its wealth-management business by buying
the Canadian operations of U.S. online brokerage E*Trade
Financial Group Inc (ETFC.O) for $442 million cash, the
companies said on Monday.
Scotiabank, Canada's third-largest bank, said the deal for
E*Trade Canada adds 125,000 active accounts to its books, and
doubles its footprint in the Canadian online investing market.
"Direct investing is an important and growing segment in
Canada, even much more so in Canada than in other markets,"
Scotiabank Chief Executive Rick Waugh said on a conference
The acquisition will add 2 Canadian cents to Scotiabank's
earnings per share by 2011, and that estimate does not include
new revenue that may come from selling bank products and
services to E*Trade customers, the head of domestic banking,
Chris Hodgson, said on the call.
"We expect minimal customer attrition," Hodgson added.
E*Trade, which said it would start selling noncore assets
to focus on its online brokerage business, said the sale and
the return of related capital will amount to about $511 million
in net cash proceeds.
E*Trade Canada provides services to retail and
institutional investors trading on electronic platforms.
About 80 percent of the Canadian business comes from retail
investors and the rest from institutional players, Scotiabank
The deal brings about C$4.7 billion in client assets under
administration and 190 E*Trade Canada employees, and is
expected to close in September or October. It needs various
The acquisition builds on Scotiabank's 2007 purchase of
Canadian online brokerage boutique TradeFreedom Securities Inc,
and the 2002 purchase of Charles Schwab Canada. But bank
executives declined to say how many trades per day are done by
its online brokerage customers and those of E*Trade Canada.
The deal was announced after the close of markets in North
Scotiabank stock closed down C$1.64, or 3.6 percent, at
C$43.82 on the Toronto Stock Exchange. E*Trade fell 26 cents,
or 9.6 percent, to $2.46 on Nasdaq.
But in after-hours trade, E*Trade shares rose 20 cents a
share to $2.66.
(Reporting by Jonathan Spicer in New York and Lynne Olver in
Toronto; editing by Rob Wilson)