The online brokerage E-Trade, continuing its transformation into a diversified financial services company, on Monday said it would sell its investment bank to Wit Capital Corp. and receive in return Wit's retail brokerage business.

The alliance puts E-Trade and Wit in a strong position to become a leading bank in Silicon Valley, though other online banks and full-service firms are paying close attention to the area, said Dan Burke, an analyst with Gomez Advisors in Lincoln, Mass.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.