ETR`s Ann:ANZ increases stake in ETR to 26%

Document date:  Wed 04 Apr 2001
Published:  Wed 04 Apr 2001 11:10:58
Document No:  232455
Document part:  A
Market Flag:  N
Classification:  Change in substantial holding , Security holder details - Other , Placement 

ETRADE AUSTRALIA LIMITED                      2001-04-04  ASX-SIGNAL-G

HOMEX - Sydney                                                        

+++++++++++++++++++++++++
E*TRADE Australia (ASX: ETR, www.etrade.com.au), today announced the
issue of 5,209,879 shares to ANZ Bank (ASX: ANZ), taking ANZ's
holding to 26.07%.

This issue is made in accordance with the alliance approved by
shareholders in August 1999. The agreement provides E*TRADE Australia
with access to ANZ's four million strong customer base in Australia
and New Zealand, while giving ANZ the opportunity to earn up to 40
per cent equity in E*TRADE Australia. ANZ's shareholding is in line
with the contribution to revenue made by ANZ-introduced customers in
the third six-month "milestone period" to the end of March 2001.

Under the alliance, ANZ is responsible for all marketing costs
incurred to encourage its customers to open accounts and trade
through E*TRADE. ANZ currently markets directly to its online banking
customers, staff, shareholders and all other general account and card
holders.

Milestone shares issued to ANZ in the three-year period ending 
29 September 2002 are for non-cash consideration. E*TRADE
Australia's accounting policy is to write off the deemed value of
these shares, which is $0.843 per share, being $4,391,928 for the
current milestone issue, as a non-cash marketing expense. This
non-cash expense represents the deemed value of marketing services
provided by ANZ to E*TRADE Australia. The value of this share issue
to the ANZ is calculated by taking the average closing price for ETR
shares on the ASX over the 20 trading days prior to the relevant
milestone date.

"We have reached the half-way point of a deal structured to allow
E*TRADE to preserve cash reserves while continuing to build its
customer base. ANZ's continued commitment to driving customers to
E*TRADE is a key driver that will help our business achieve scale and
volume-based operational efficiencies," said Michael Deleray, CEO,
E*TRADE Australia.

"E*TRADE Australia is an important part of ANZ's wealth management
strategy which covers a diverse range of activities. As a key partner
in online trading, E*TRADE Australia and ANZ are working together on
a number of initiatives to benefit our respective and shared
customers," said ANZ Managing Director, Wealth Management, Craig
Coleman.

The increase in ANZ's holding comes at a time when E*TRADE is
continuing to record success in the active trader segment. According
to www.consult, 29% of those who trade shares over the Internet
more than once a week hold an E*TRADE account.

E*TRADE is also leveraging its core technology platform, being the
first and only broker to offer "Visitor Trade" to non-account holders
via a growing number of web sites and achieving early success in the
lucrative financial intermediary market. E*TRADE Australia has signed
agreements with a number of service providers and financial planning
groups including FloatNews, Datatech Financial Services, MDRN
Financial Planning, Dowling and Associates and Professional
Investment Services. A recent agreement also placed E*TRADE Australia
as the preferred online trader for online investor adviser group
daytraderHQ. 

These strategies have resulted in E*TRADE maintaining its position as
the second most active online securities firm in Australia at a time
when market conditions and trading volumes continue to be subdued.
E*TRADE executed 180,912 trades on the ASX in the March quarter, up
11.4% on the December quarter.

Revenue diversification is important for the medium-to-long-term
success of the company. E*TRADE has continued to develop its
competencies in the distribution of managed funds and margin loans to
complement ASX transactional driven revenue.

OTHER KEY HIGHLIGHTS INCLUDE:

* At March 30, 2001, E*TRADE had 75,640 customer accounts with
aggregate balances of $1.9bn.

* Of those customers, 30% were introduced through ANZ, which
represents a 30% increase in co-branded customers since the last
milestone date (September 29, 2000).

* Current quarter's gross brokerage revenue increased by 13.6% when
compared with the December quarter.

* Cash and cash deposits at February 28, 2001 amounted to 
$13.8 million. Based upon current results and trading expectations,
cash reserves are not expected to fall below approximately 
$10 million during the quarter ending June 30, 2001.

* Whilst the operating cash loss in the second half should be less
than the first, the full year's cash loss is not anticipated to
significantly differ from last year.

"Compared with the same quarter last year, we have seen ASX trades
down 35%. In addition these past 12 months brought a number of new
entrants in the online market and this gave rise to intense price
competition. In these conditions, E*TRADE has been able to maintain
its number two position in the Australian online securities market.
In this period, we have substantially improved our systems and online
offering, we have put in place the foundations for increasing
non-transaction revenue and management is introducing significant
changes in our cost structure. We are continuing with this strategy
to conserve our cash reserves until our business model becomes cash
positive," said Kerry Roxburgh, Chairman, E*TRADE Australia.


For more information:

Investors, Shareholders and Analysts: 

Please contact Mark Zworestine
COMPANY SECRETARY/CHIEF FINANCIAL OFFICER 
on (02) 9432 5224

Media: 

Please contact Bill Wileman
GENERAL MANAGER MARKETING 
on 9253 5429 
or 
Michael Deleray
GROUP CHIEF EXECUTIVE OFFICER 
on (02) 9253 5414.