NEW YORK, March 10 (Reuters) - TD Ameritrade Holding Corp has no interest at the moment in buying smaller discount brokerage rival E*Trade Financial Corp, TD Ameritrade Chief Executive Fred Tomczyk said on Tuesday.
“I am not putting a lot of time wasting calories on that right now,” he said at a conference sponsored by Citigroup.
Without mentioning E*Trade by name but in response to a question about buying a rival that is in the news, Tomczyk said he would only use excess capital to buy a company that adds a new capability or that can be done at “attractive economic terms.”
The company being discussed wouldn’t add new capabilities and “at this point” can’t be done at attractive terms, he said.
Analysts at Wells Fargo Securities earlier on Tuesday told clients in a report that E*Trade could sell itself at a strong price since it has shaved its risky home lending portfolio by almost 90 percent, particularly for online discount brokerage competitors.
“ETFC has an attractive business and cost savings could be material” for competitors that can lop off duplicative technology costs and other expenses, Christopher Harris and his team wrote. They forecast that E*Trade, whose shares fell 1.3 percent on Tuesday to $27.56, could be acquired by TD Ameritrade at $45 a share and by Schwab at $55 a share without diluting their own stock prices.
Tomczyk, however, said another deterrent to buying E*Trade is that most potential acquirers are bank holding companies, and bank regulators today “haven’t been overly kind to big transactions that involve banks.”
Both Schwab and E*Trade own commercial banks, and TD Ameritrade’s biggest shareholder is Toronto-Dominion Bank.
Schwab as a matter of policy does not comment on speculation about acquisitions, spokesman Greg Gable said in an email.
Spokesmen at E*Trade, which almost collapsed during the financial crisis because of the bad housing loans it had made, did not immediately respond to requests for comment.
Shares of Schwab fell 2.1 percent to $30.32 on Tuesday. TD Ameritrade shares were off 1.1 percent at $37.04. (Reporting By Jed Horowitz; Editing by Bernard Orr)