E*Trade Abandons Operations in United Kingdom

Andrew Klips |

E*Trade Abandons Operations in United KingdomFollowing industry rivals TD Ameritrade (AMTD) and Charles Schwabb Corp. (SCHW), E*Trade Financial Corp. (ETFC) said that it is closing its United Kingdom brokerage business to focus on U.S. operations.  The majority of E*Trade customers are in the United States and the brokerage firm is shifting its focus on its core competencies as a broker while devaluing its efforts in banking.  E*Trade did not disclose how many of its more than four million accounts worldwide will be affected by the closing.

Previously, E*Trade shuttered operations in Germany and the Nordic region.  In 2008, it sold its Canadian business to Scotiabank (BNS) for about $450 million.

Trading activity has slowed in many European region countries amidst investor concerns about the large sovereign debt problems and worries about global economic growth.  Last week, Eurostat, the official statisticians of the European Union, reported that the 17-nation euro zone slipped back into a recession with its second straight quarter of gross domestic product contraction.



Customers of European E*Trade arm, called E*Trade Securities Ltd., have been given the option to transfer or liquidate their portfolios.
E*Trade has been restructuring ever since getting itself into trouble with too many bad investments in the US housing market  that led to a couple bailout packages from Citadel LLC, the hedge fund stalwart and largest E*Trade shareholder, to steady its shaky capital position.

During the most recent quarter, E*Trade’s mortgage portfolio value shrunk to $11.1 billion, a 19 percent drop compared to the third quarter of 2011.

The jettisoning of its European offerings is the latest in the string of corporate moves to rebuild since the housing market collapse four years ago.  Last week, E*Trade appointed James Lam to its Board of Directors, Chair of the Risk Oversight Committee, and a member of its Audit Committee.  The online financial services company is still on the hunt for a new chief executive as well since removing Steven Freiberg in August.  Chairman Frank Petrilli has been holding the interim position until a replacement is found.

Last Wednesday, E*Trade released its monthly activity for October. Daily Average Revenue Trades (DARTs) for October were 124,246, a 10 percent drop from the month prior and a 21 percent decrease from October 2011. The NYC-based company added 23,365 gross new brokerage accounts in October, ending the month with approximately 2.9 million brokerage accounts, representing a decrease of 5,153 from September. Total accounts ended the month at approximately 4.4 million.

Shares of ETFC closed on Friday at $7.88, making shares basically flat for 2012 after rising as high as $11.50 in March.

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Companies

Symbol Name Price Change % Volume
ETFC E*TRADE Financial Corporation 44.90 0.45 1.01 1,775,871 Trade
BNS Bank of Nova Scotia 65.82 -0.46 -0.69 670,453 Trade
OGD:CA Orbit Garant Drilling Inc. 2.14 0.03 1.42 6,100
AMTD TD Ameritrade Holding Corporation 49.20 0.21 0.43 1,652,833 Trade
SCHW Charles Schwab Corporation (The) 46.08 0.96 2.13 7,767,059 Trade

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