E*Trade - the online broker and e-bank - is splashing out $700m in cash to buy Canada-based rival Harrisdirect.

The transaction, which still needs the usual regulatory rubber stamps, is expected to close by October.

Harrisdirect - which is owned by BMO Financial Group - has around 430,000 active accounts with an average balance of more than $70,000. As part of the deal announced yesterday, E*Trade will handle a further 15,000 trades a day and will be able to market its services to more than 300,000 punters.

Once the deal is completed, E*Trade will handle more than four million accounts and around 130,000 trades a day. BMO's decision to flog Harrisdirect followed a review of the business. Execs found that it would have cost too much to continue growing the business and that the cash could be used instead for something altogether more profitable.

The transaction is expected to deliver pre-tax operating synergies of approximately $186m, which will be comprised of $114m in expense synergies and $72m in revenue synergies, said E*Trade in a statement. ®

Related stories

NatWest issues cash card to Dick Head
Zopa the bank that likes to say 'Hello There!'
Egg soldiers on