BMO Financial Group today announced that it has signed a definitive agreement to sell Harrisdirect to E*Trade Financial Corp. for US$700 million, in cash.

In addition, at closing, Harrisdirect will distribute approximately US$50 million to BMO Financial Group, resulting in aggregate proceeds of approximately $910 million (US$750 million).

The transaction, which is subject to normal regulatory clearances, is expected to close by BMO’s fiscal year-end in October 2005.

“This transaction is a win; it will benefit both our clients and our shareholders,” said Tony Comper, president and CEO, BMO Financial Group, in a news release.

“BMO remains fully committed to continuing to expand its operations in the United States,” said Comper. “For BMO, this transaction increases value to our shareholders and will allow us to redeploy capital to higher-return businesses and to concentrate our attention on our goal of becoming the leading personal and commercial bank in the U.S. Midwest,” he added.

“The decision to sell Harrisdirect followed an assessment of Harrisdirect’s ability to compete in a changing landscape,” Comper said.

Harrisdirect has approximately 430,000 active accounts and US$32 billion in assets under administration. The business provides online brokerage services to individual investors as well as third-party brokerage services to institutional clients.

The BMO announcement comes less than two months after Toronto-Dominion Bank announced a deal to fold its discount brokerage TD Waterhouse into the operations of Omaha, Neb.-based Ameritrade, creating the world’s No. 3 on-line broker in assets and customers. TD will take a 32% stake once the deal closes at the end of this year, and then immediately increase it to 39.9%.

BMO said it will continue to operate its Canadian online broker, BMO InvestorLine, which is a separate company that is not affected by this transaction.