Sept 4 E*Trade Financial Corp on
Wednesday said U.S. bank regulators had approved its request to
use capital from its bank subsidiary for broader corporate
purposes, a sign of progress in its recovery from bad mortgage
loans that severely crippled the company.
Shares of E*Trade, which under new management is focusing on
rebuilding its online discount brokerage business and
eviscerating bad credits and expenses, rose nearly 7 percent in
The New York-based company said it would deploy $100 million
of bank capital to its parent this month and seek approval for
similar distributions of $100 million per quarter "over the near
In a filing with the Securities and Exchange Commission,
E*Trade did not say how it will use the money. In recent
presentations, it said paying off corporate debt was a priority.
The company would be able to retire its $500 million of 6
percent notes before they are callable in November 2014 if
regulatory approval continues over the next four quarters,
Wells Fargo Securities analyst Christopher Harris wrote in a
note to investors.
Paying off the debt would add roughly 6 cents per share to
E*Trade's earnings and reduce its debt by nearly 30 percent,
E*Trade said approval for "upstreaming" the bank dividends
came from the Office of the Comptroller of the Currency, the
regulator for national banks, and from the Federal Reserve Bank
"Today's announcement reflects E*Trade's significant
progress on our capital plan, including de-risking and
deleveraging the balance sheet, bolstering our enterprise risk
management capabilities and strengthening the Company's overall
financial position," Chief Financial Officer Matthew Audette
said in a prepared statement.
Reuters last week reported that at least four firms were
bidding for E*Trade's Chicago-based market-making business, G1
Execution Services, which is expected to sell for more than $100
million. E*Trade took a $142.4 million impairment charge to
close the unit earlier this summer.