ANZ bank has plunged into the online financial services market with the announcement of a strategic alliance with Internet stockbroking company E*Trade.
ANZ says the agreement will give E*Trade Australia access to ANZ's four million customers, and ANZ will in turn have the opportunity to take up to 40% equity in E*Trade.
The deal fulfills what many have seen as an inevitable branching out of Australian and New Zealand retail banks into online financial services, and represents another boost for US-based E*Trade's Australian operation, which is also associated with Computershare, the software and services company cutting a swathe through the region's sharebroking industry.
The agreement's terms will encourage ANZ to maximise take-up among its client base by tying it to ANZ's eligibility for equity in E*Trade.
ANZ customers will be able to click straight through to an E*Trade Australia site, which will be co-branded with ANZ, from the ANZ online banking services site.
ANZ will receive an initial six million shares (equivalent to 10% of the enlarged capital) credited as fully paid, raising E*Trrade Australia's issued capital to approximately 60 million shares.
Once ANZ customers account for more than 10% of E*Trade Australia's total on-market transactions, additional shares will be issued to ANZ every six months in accordance with an agreed formula over a total period of three years; and,
If, during the final six month period, ANZ is delivering in excess of two-thirds of E*Trade Australia's total on-market transactions, ANZ will be entitled to receive a further 5% equity in E*Trade Australia.
ANZ says it will "make a significant marketing investment into educating its client base on the benefits of online investing," with the aim of generating traffic to the co-branded site. ANZ will also be granted options to purchase a further 4 million shares in E*Trrade Australia and will have representation on the Board of E*Trade Australia.
The alliance is subject to due diligence and shareholder approval at the E*Trade General Meeting scheduled for August.
Tim Hughes, CEO of RG Capital, E*Trade Australia's largest shareholder (29%) praises "the phenomenal market reach this deal delivers," which "places the company in an ideal position to become the number one provider of online financial services in this region."
Computershare's chief operating officer Mark Elliot has also praised the deal an says his company "fully plans" to exercise its right to maintain its 15% equity in E*Trade Australia