Bank of Montreal has acquired New Jersey-based direct investing firm CSFBdirect Inc., a subsidiary of Credit Suisse First Boston, for US$520 million.

The deal increases BMO’s client base in the United States by 50%. CSFBdirect is the sixth acquisition by Bank of Montreal in the U.S. in two years. It adds nearly a half a million active client accounts, and one million total accounts. BMO and its Chicago-based U.S. subsidiary Harris Bank will now have over 7.5 million customers in the two countries.

The transaction is valued at $830 million (US$520 million) and will be funded by non-common Tier 1 capital. Impact on cash earnings per share is expected to be neutral in year one, excluding one-time costs, and accretive to earnings thereafter. The transaction is expected to close in February 2002 and is subject to regulatory approval.

In addition to its online operations, CSFBdirect has physical locations in New York City; Chicago; Atlanta; Philadelphia; San Francisco; Dallas; Salt Lake City, Utah; Boca Raton, Florida; Charlotte, North Carolina and Jersey City, New Jersey. Those locations are in addition to 18 physical locations for Harris InvestorLine, the bank’s U.S. direct investing firm.

CSFBdirect will be integrated with Harris InvestorLine to create a new firm called Harris Direct Investing. It will be part of The Harris, the bank’s wealth management business in the U.S. Harris Direct Investing will be headquartered in Jersey City, New Jersey, and led by Bruce Schwenger, Head of Global Direct Investing for Bank of Montreal’s Private Client Group.

Additionally, CSFB announced that Bank of Montreal has also signed multi-year contracts as clients of Pershing, CSFB’s clearing and settlement unit, and iNAUTIX, Pershing’s technology unit.

“This acquisition is another significant step forward in our substantial and selective expansion in the United States,” said Tony Comper, BMO’s chairman and CEO. “CSFBdirect is an outstanding addition to our U.S. operations, increasing our U.S. client base to a million and a half and bringing us closer to our goal of becoming a truly trans-national financial services firm with significant operations on both sides of the Canada-U.S. border.”

Gilles Ouellette, president and CEO BMO Private Client Group says, “We also obtain an outstanding team of professionals and strengthen our overall wealth management business in the U.S. and Canada. CSFBdirect gives us an affluent client base we believe will benefit from our integrated approach to investing and the more than 100 years of experience we have in the wealth management business in the U.S.”

The deal continues the cost cutting at CSFB, led by its new CEO, John Mack. Mack said, “CSFB has built a strong franchise providing online brokerage services to retail clients, and we are pleased to find a buyer that is committed to the business. This divestiture is part of our strategy that will allow us to focus on our core businesses while reducing costs. We can also concentrate exclusively on increasing our market share in those areas where we already have a significant leadership position.”