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ETR: ANZ Increases stake in ETR to 35%/Appendix 3B

Document date:  Wed 03 Apr 2002
Published:  Mon 08 Apr 2002 16:24:59
Document No:  260517
Document part:  A
Market Flag:  N
Classification:  Change in substantial holding , Appendix 3B

ETRADE AUSTRALIA LIMITED                      2002-04-03  ASX-SIGNAL-G

HOMEX - Sydney                                                        

+++++++++++++++++++++++++
BUSINESS FUNDAMENTALS CONTINUE TO STRENGTHEN

Sydney, 3 April 2002 - E*TRADE Australia (ASX:ETR,
www.etrade.com.au), today (03/04/2002), announced the issue of
9,550,260 "milestone" shares to the ANZ Bank (ASX: ANZ) taking ANZ's
shareholding from 28.33% to 35%.

This issue is made in accordance with the alliance approved by
shareholders on 25 August 1999. ANZ received all initial placement of
shares representing 10% of the Company's capital in return for
marketing the ANZ/E*TRADE co-branded service to its customers. The
ANZ has the right to be issued up to 35% of shares in E*TRADE
Australia. In the final "milestone" period of six months to 29
September 2002, a bonus shareholding of 5% could be earned if
ANZ/E*TRADE customers comprised two-thirds of total trades in that
period. ANZ's shareholding is in line with its contribution to
revenue for the fifth "milestone" period to the end of March 2002.

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

"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,
($0.5611 per share for this issue), being $5,358,651 for the current
milestone issue, as a significant unusual 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
"milestone" share issue to the ANZ is the average closing price for
ETR shares on the ASX over the 20 trading days prior to 30 March
2002.

"Based upon recent trading volumes, ANZ has now earned a 35%
shareholding in E*TRADE Australia. We do not anticipate another share
issue to the ANZ for the final 'milestone' period ending 29 September
2002, in respect of the 5% bonus. Therefore, March 2002 should bring
an end to the process of significant non-cash share issues that
negatively impact the profit and loss account, but do not impact our
cash position," said Michael Deleray, Group Chief Executive Officer.

"We look forward to a 2003 financial year uncomplicated by
significant unusual non-cash expenses that in the three years ending
30 June 2002 have added a layer of complexity in explaining the
Company's underlying operating performance," said Mr Deleray.

Customers introduced by ANZ now exceed 35,000 accounts representing
more than 37% of the total customer base.

"This share issue to the ANZ reflects its strong contribution to the
E*TRADE business," said Mr Deleray. "The structure of the alliance is
beneficial to both parties and our experience with ANZ continues to
be very positive. ANZ has always been strongly committed to working
with E*TRADE to create innovative products that enhance the
ANZ/E*TRADE experience. We are currently developing an exciting new
banking service for ANZ/E*TRADE customers that will enable them to
utilise a range of convenient banking facilities from their E*TRADE
investment account, thereby allowing customers far greater
flexibility in their banking arrangements," said Mr Deleray.

Simultaneous with this milestone issue to ANZ, Computershare Limited
(ASX: CPU) has exercised its right to make a cash subscription of
$720,099 for an issue of 1,283,371 shares to "top-up" at the same
price applicable to the milestone issue. ie. $0.5611.

The shares are issued in accordance with the terms of the
Subscription Agreement dated 17 May 1999 between Computershare and
E*TRADE Australia wherein Computershare is entitled to maintain its
shareholding percentage (11.84%) in E*TRADE Australia in the event of
any new issues of shares.

Commenting on the second half, Mr Deleray said, "Though March has
slowed somewhat, January and February 2002 generated gross brokerage
revenue levels not seen since July 2000. At the end of March 2002,
the Company's operating cash reserves exceeded $11 million, compared
with $10.3 million at 31 December 2001. Customer numbers are
approaching 100,000 with assets under E*TRADE's administration
exceeding $2.75 billion."

For more information:

INVESTORS, SHAREHOLDERS AND ANALYSTS: 

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

MEDIA:

Please contact:
Michael Deleray, 
GROUP CHIEF EXECUTIVE OFFICER; on
(02) 9253 5414 

DISCLAIMER

The statements contained in this news release that are
forward-looking are based on current expectations that are subject to
a number of uncertainties and risks, and actual results may differ
materially. The uncertainties and risks include, but are not limited
to, changes in market activity, anticipated increases in the rate of
new customer acquisition, the conversion of new visitors to the site
to customers, seasonality, the development of new products and
services, the enhancement of existing products and services,
competitive pressures (including price competition), system failures,
economic and political conditions, changes in consumer behaviour and
the introduction of competing products having technological and/or
other advantages.

ABOUT E*TRADE AUSTRALIA (www.etrade.com.au) 

E*TRADE Australia's services are provided by ETRADE Australia
Securities Limited, a member of the Australian Stock Exchange and
holder of a dealers license and a subsidiary of ETRADE Australia
Limited. E*TRADE Australia is a trademark of E*TRADE Group Inc.
ETRADE Australia Securities Limited holds the license from E*TRADE
Securities, Inc., a subsidiary of E*TRADE Group. Inc, The license
provides ETRADE Australia Securities Limited the rights to the
E*TRADE brand, technology and services, under the E*TRADE Australia
banner. E*TRADE Australia offers independent investors the
convenience and control of automated securities order placement,
along with a suite of value-added products and services that can be
personalised, including portfolio tracking, charting and quote
applications, real-time company announcements, news and other
information services. E*TRADE Australia does not provide investment
advice.

ABOUT E*TRADE FINANCIAL

E*TRADE Financial brings together a personalized and fully integrated
financial services solution that includes investing, banking,
lending, planning and advice. Delivered in a multi-touchpoint
platform, the products, services, content and information at E*TRADE
Financial are available to customer households through E*TRADE
Financial Centers, Zones, ATMs and branded web sites throughout the
world. Securities products and services are offered by E*TRADE
Securities, Incorporated (member NASD/SIPC), bank products and
services are offered by E*TRADE Bank (member FDIC), mortgages are
offered by E*TRADE Mortgage Corp, and E*TRADE Financial Advisor is a
service of E*TRADE Advisory Services, Inc, an investment advisor
registered with the SEC.

IMPORTANT NOTICE

E*TRADE, the E*TRADE logo and Stateless Architecture are registered
trademarks of E*TRADE Group, Inc. or its subsidiaries. The statements
contained in this news release that are forward-looking are based on
current expectations that are subject to a number of uncertainties
and risks, and actual results may differ materially. The
uncertainties and risks include, but are not limited to, changes in
market activity, anticipated increases in the rate of new customer
acquisition, the conversion of new visitors to the site to customers,
seasonality, the development of new products and services, the
enhancement of existing products and services, competitive pressures
(including price competition), system failures, economic and
political conditions, changes in consumer behaviour and the
introduction of competing products having technological and/or other
advantages. Further information about these risks and uncertainties
can be found in the information included in the annual report filed
by E*TRADE Group, Inc. with the SEC on Form 10-K (including
information under the caption "Risk Factors") and quarterly reports
on Form 10-Q.

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