E-Trade Financial Corp. today is rolling out a service letting its customers trade in six foreign markets, and executives gave more details about its international banking plans.
The wider plan includes unveiling banking products in Europe and Hong Kong. E-Trade expects to obtain a banking charter in the United Kingdom in the third quarter. Hong Kong is "an important market with a lot of cash," said Mathias Helleu, who heads the international business for the $53.7 billion-asset E-Trade.
The New York company has not applied for a banking charter in Hong Kong. "It's not in our budget for 2007, but it's something we may look at, hopefully, in 2008," Mr. Helleu said Thursday.
The plans for Britain and the rest of Europe are further along. After obtaining its banking charter in Britain, E-Trade would immediately begin offering deposit products there, and the charter would allow it to expand elsewhere in Europe. Next year it plans to start offering deposit products in Germany then France and other countries.
With the feature being announced today, traders can access six foreign markets directly and keep funds in the five foreign currencies of those countries: Canada, France, Germany, Hong Kong, Japan, and the U.K. They can move funds between currencies without transaction fees, and place trades in foreign securities and funds from their E-Trade account. Their foreign assets are automatically added to the total they keep at E-Trade.
Michael Curcio, who heads global retail operations for E-Trade, said 66% of its customers are interested in trading at foreign stock exchanges.
E-Trade expects to generate more business from established customers as well as attract new ones with the new service, Mr. Curcio said. He said it has not determined how much it wants to increase its trading revenue with the feature.
Also today, E-Trade makes its online trading service available in Dubai, India. It plans to start offering the service in the Netherlands later this quarter, in Italy in November, and in Singapore later in the year, Mr. Helleu said.
E-Trade, which was established in 1982, has had international operations since 1999 and now operates in 42 countries. Mr. Helleu said that online trading continues to more popular in the United States than abroad.
"Here, 50% of the investing business is done online," he said. "In France it is 15%," he said, though "the online segment is growing fast" throughout Europe.
"By the end of this year we will be pretty much done with the geographic expansion," Mr. Helleu said. E-Trade will then focus on expanding its customer base from active traders to the broader mass-affluent market, as it has done in the United States in recent years.
E-Trade said in the fall that within five years it wanted to generate 30% of its profit abroad. "To get there, I am going to need to be pretty much the same balance" in deposits and loans relative to the United States, Mr. Helleu said Thursday. "If my commission revenues are 80%, I will never make the bottom-line goal."
As of Dec. 30, E-Trade had $24.1 billion of deposits and sweep funds in United States, up 50.9% from a year earlier, and $26.4 billion of loans, up 35.8%. It announced Jan. 18 that its fourth-quarter profit grew 36.6%, to $176.7 million. The company has said it is aiming for 33% growth in both types of accounts this year.
