E*Trade Meets HKMA To Discuss Online Banking Expansion

by Carla Johnson, Investors Offshore.com

20 March 2002

It was revealed on Tuesday that online brokerage giant E*Trade has met with the Hong Kong Monetary Authority in order to discuss plans to expand into the online banking market in the SAR.

Although E*Trade already offers e-banking services in the United States, the group has thus far refrained from offering similar services on the Asian markets, preferring to observe the North American cycle in order to gauge the success of the venture there.

However, with trading volumes dropping in its Hong Kong division, the company clearly feels that the time has come to diversify income away from its online brokerage operation.

Speaking to the South China Morning Post, the firm's North American Managing Director, Mitchell Caplan, said that the meeting would show the HKMA 'how serious we are about banking here,' explaining that: 'We want to figure out the appropriate structure to create products for Hong Kong's citizens.'

The E*Trade Group has not yet announced whether it intends to apply for a full banking licence, a restricted banking licence, or for a deposit-taking licence.

Although the latter two options restrict the amounts and terms of deposits which a bank is permitted to receive, all three permits would allow the organisation to extend traditional banking services such as deposit-taking, mortgage lending, and credit cards to SAR customers.

Mr Caplan told the SCMP that E*Trade intends, as closely as possible, to replicate the US model, offering an online service supported by a network of ATMs.

'We own 11,000 ATMs in the US - the second largest ATM network in the country,' he announced.

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