E*Trade Financial is to buy HarrisDirect from Canada’s BMO Financial Group for $700 million. The acquisition gives E*Trade 430,000 customers...

E*Trade Financial is to buy HarrisDirect from Canada’s BMO Financial Group for $700 million. The acquisition gives E*Trade 430,000 customers — each with an average account balance of $70,000. HarrisDirect, which was founded by the old Donaldson, Lufkin, Jenrette brokerage group and later owned by Credit Suisse First Boston, is not profitable. E*Trade will benefit by getting a bigger slice of the online brokerage market, which will create financial synergies worth at least $114 million and extra revenues on top of that worth $72 million. E*Trade said acquiring HarrisDirect would bring it about $32 billion in assets under administration. The combination will have more than 4 million customer accounts, about $130 billion in customer assets and about 130,000 daily trades. E*Trade added that the deal, which is expected to close by October, should enable it to achieve its goal of raising operating margins to 40 per cent from 36 per cent. The BMO group said it decided to sell HarrisDirect because additional capital would have been needed to enlarge the business and keep it competitive in the current environment. "We concluded that HarrisDirect would be more valuable to another participant in the online brokerage industry," chief executive Tony Comper said in a statement. Earlier this year, E*Trade had tried to acquire another online broker, Ameritrade Holdings, but the deal fell through. Ameritrade later went on to acquire rival TD Waterhouse USA.