were edging higher after the struggling online brokerage agreed to sell the assets of its wealth management subsidiary.
PHH Investments, a Texas-based registered investment advisor that specializes in providing retirement advice and investment management to airline employees, has agreed to purchase the assets of E*Trade's RAA Wealth Management. E*Trade expects the deal to generate $80 million in proceeds and to close in April.
E*Trade will continue to offer investment and financial planning advice to its core retail and corporate services clients, the company said.
As the credit crunch worsened last year, E*Trade embarked on a restructuring to refocus the company on retail banking and trading. Part of E*Trade's problem was that the firm expanded beyond its traditional roots by piling risky asset-backed securities onto its balance sheet.
Citadel Investments stepped in to bail out E*Trade after the brokerage was forced to take writedowns on its asset-backed securities portfolio, primarily within collateralized debt obligations, or CDOs, and second-lien securities. Citadel ended up taking a 20% stake in the company, as well as purchasing the $3 billion asset-backed securities portfolio for just $800 million.
Last month, the company was able to sell an additional $3 billion worth of mortgage-related securities and municipal bonds with a realized loss of "less than $5 million" on the sale.
E*Trade reiterated on Monday that the company is actively working to improve capital and liquidity and reduce expenses. Management has identified additional "non-core assets" with "high market demand" that it also plans to sell.
"We have taken swift action and are generating results to maximize the value of our assets," acting CEO Jarrett Lilien said in a statement. "Effective execution of our turnaround plan will be measured by our continued ability to monetize assets, reduce balance sheet risk, streamline expenses and re-invest in growth that strengthens the overall franchise and best meets the needs of our customers."
Shares recently were rising 13 cents to $5.30.