German online broker Direkt Anlage Bank (DAB) yesterday announced that it is buying France's Self Trade in a deal which will create one of Europe's largest online brokers. The European online broking market as a whole is heating up, with brokers moving out of their domestic markets either by acquiring existing businesses or setting up new operations. This deal means that in one fell swoop DAB will add coverage in four major European markets to its operations based in Germany.
The all-stock transaction values Self Trade at US$1.28bn. The merger is still subject to approval from the French banking regulators and DAB's shareholders but Roland Folz and Mattias Kröner, joint chief executive officers of DAB, said: 'The combination of Self Trade and DAB instantly makes us a truly pan-European champion in the online brokerage industry. With leading positions in France and Germany, our competitiveness and speed to market throughout Europe will be hugely enhanced.'
Self Trade launched its French operation in December 1998. By the end of June it had 29,847 online customers, up from 11,160 a year earlier. About 40 French brokers have sprung up in the past two years, and through aggressive pricing, Self Trade has built itself up to be one of the country's leading operators. DAB has targeted France because trade is booming on the Paris bourse.
According to some estimates, there could be as many as 14 million online investment accounts in Europe in the next three to four years. At the last count there were about 100 online brokers. Despite the consolidation, however, it is widely felt that Europe still lags behind the US in the quality of online brokerage service. In a recent global survey by Lafferty Internet Ratings that looked at design, content, navigation, content and speed, the top seven spots went to American brokerages, with E*Trade gaining top marks. Self Trade came in eighth.
If the deal between DAB and Self Trade goes through, the combined group will have operations in Germany, France, the UK, Italy, Spain and Switerland and will be Europe's premier brokerage in terms of geographic coverage. It would have nearly 325,000 customers, which would place it in the superleague of European online brokers - Europe's third largest in terms of account numbers. A statement from the two companies said: 'The new group, DAB-Self Trade, is particularly well-positioned to benefit from the future growth of the European markets.'
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