Leading online broker E-Trade Group Inc. of Palo Alto said Tuesday it is buying Virginia-based online banker Telebanc Financial Corp., creating the first purely Internet-based financial services company.
Once the merger is complete, E-Trade customers would be able to trade stocks, apply for mortgages and pay bills, among other transactions, all on the same Web site.
Under terms of the deal, E-Trade would acquire Arlington-based Telebanc for stock worth about $1.8 billion. The combined company would carry the name E-Trade, company executives said. Customers would access Telebanc's banking services through links on E-Trade's main site.
E-Trade made its name as a stock brokerage but has been trying to diversify. The company already sells mutual funds and has a deal with online mortgage provider E-Loan Inc. that lets E-Trade's 1-million-plus customers apply for mortgages online.
