E*Trade buys $1.5 billion in Chase CDs

No. 2 Web trader seeks more banking business

October 16, 2001|By BLOOMBERG NEWS

ARLINGTON, Va. - E*Trade Group Inc., the second-largest online broker, said it agreed yesterday to buy $1.5 billion in certificates of deposit from J.P. Morgan Chase & Co. to increase its banking business. Terms weren't disclosed.

The accounts will increase E*Trade's deposits by nearly one-fifth, to $9.5 billion. The 33,000 accounts will bring E*Trade's total to 469,000.

E*Trade said it expects the acquisition to add to revenue and earnings immediately.

J.P. Morgan Chase, which had $276.8 billion in deposits on June 30, said it's selling deposits held by customers of a Chase Manhattan subsidiary that deals with customers through the mail and by phone. "These accounts have nothing to do with our branch-based accounts," a spokeswoman said.

E*Trade has been buying banking and asset management companies to offset a decline in online equity trading as U.S. stocks fell.

The company bought Telebanc Financial Corp. in January 2000 and online lender LoansDirect in February.

E*Trade shares fell 7 cents to $7.35 and J.P. Morgan Chase shares rose 66 cents to $33.55.

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