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Fleet May Spin Off Suretrade Online Brokerage
Reuters
BOSTON — Fleet Financial Group Inc. is considering hitching a ride on the Internet IPO rocket, saying Thursday that it might spin off its Suretrade Internet brokerage unit.

Fleet said its fast-growing Suretrade unit would turn a profit in the first quarter and, to maximize shareholder value, it would consider a public offering or joint venture.

"Obviously, we've seen a lot of these Internet stocks take off," said Fleet spokesman Charles Salmans.

No timetable for making a decision has been set.

Launched by Quick & Reilly in late 1997, just before the discount brokerage was acquired by Boston-based Fleet, Suretrade boasts 250,000 customer accounts, including 45,000 opened in the last quarter. About 11,500 trades are executed daily and customer assets exceed $1.1 billion, Fleet said.

Internet industry analysts value online brokerage stocks at anywhere from $2,000 to $10,000 per account, according to Salmans, meaning Suretrade could theoretically be worth $500 million to $2.5 billion, "a pretty wide range," he said.

Analysts were intrigued.

"You bury Suretrade within a big banking corporation, it isn't likely you're going to get a valuation as rich as you would get with Suretrade trading by itself," said Kevin Timmons of First Albany brokerage house. "With the valuations you can get right now, it would be silly not to look at it."

Diana Yates of A.G. Edwards agreed: "They're not going to get the full benefit if it's within a bank ticker symbol."

Analysts wondered whether a Suretrade spin-off might cannibalize Quick & Reilly's brokerage business, but Salmans said that less than five percent of Suretrade customers have done business with Quick & Reilly.

Suretrade customers tend to be young, active traders with smaller accounts, he said. While the average Suretrade customer is 34 years old, the average Quick & Reilly online trader is 43 and the average Quick & Reilly customer who uses a broker is 53, he said.

Fleet also expects its Quick & Reilly/Fleet Securities Inc. unit, which includes the discount brokerage, to post record profits in the first quarter, "up strongly" from the same period a year ago.

Fleet shares rose 69 cents to close at $44.625 on the New York Stock Exchange.

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