E*trade sells the unit and cuts the costs

A deal worth US$442 million was arranged by Online discount brokerage E*Trade with Scotiabank. Under the terms of the deal E*Trade is to sell its Canadian operations to Scotiabank.

Earlier in January a massive fourth quarter net loss of $1.7 billion was posted by the company while the net income the year before amounted $176.9 million which is explained by getting badly burned by the US mortgage crisis last year.

The plans of selling 43.85% stake in Indian brokerage IL&FS Investsmart to HSBC were disclosed by E*Trade in May. The deal was expected to raise $145 million.

"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," says Donald Layton, chairman and CEO, E*Trade.

According to the statements made by the Scotiabank officials the purchase of E*Trade Canada with about 4.7 billion in assets under administration and 190 employees is to increase the bank’s presence in the Canadian online investing market.