E*Trade to acquire 1 million retail brokerage accounts from Capital One

The discount brokerage will pay $170 million for the brokerage accounts, which will add roughly $1.7 billion in cash and $115 million in margin loans to E*Trade's balance sheet, executives said on a conference call with analysts.

"Opportunities like this, in which we can efficiently add a large number of customers to our highly scalable platform, do not come along often," Karl Roessner, E*Trade's chief executive, said on the call.

Capital One declined to comment and referred questions to E*Trade.

Clients in these new accounts trade less frequently than E*Trade's typical client base.

However, the acquisition price, broken down by accounts, was lower than E*Trade's usual client acquisition cost, Roessner said.

"The price was right, and we went after scale," Roessner said.

The deal is expected to close by the third quarter this year, subject to regulatory approvals, and will have a neutral impact on 2018 earnings, executives said. Funding will come from existing corporate cash.

The discount brokerage also reported a 13 percent fall in fourth-quarter net income to $129 million, as the company recognized a $58 million tax expense due to the new U.S. tax law.

(Reporting by Elizabeth Dilts; Editing by Susan Thomas and Daniel Wallis)