Bank of Montreal is acquiring the self-directed online client accounts of Morgan Stanley Individual Investor Group for $167 million ($US106 million).

The accounts will be integrated into Harrisdirect, the bank’s direct investing business in the U.S. The transaction makes the bank’s direct investing business the sixth largest in North America based on accounts. It now boasts approximately 1 million active accounts, more than 1.5 million client accounts in total, and assets under administration of $60 billion.

The transaction is expected to have nominal impact on cash earnings per share in year one and be accretive after that. The transaction is expected to close in 60 to 90 days.

“This acquisition continues the build out of the national platform for our wealth management business in the United States under the well recognized Harris name,” said Tony Comper, chairman and CEO. “Our growth strategy is to expand selectively and substantially in the U.S., while continuing to invest in our core Canadian franchise.”

“The purchase of the online client accounts allows us to continue to broaden and deepen the relationship with direct investing clients by providing access to our full range of wealth management products and services,” said Gilles Ouellette, president and CEO, BMO Private Client Group.

The deal affects only those Morgan Stanley accounts that invest exclusively online without
the benefit of a financial advisor. Morgan Stanley’s clients who work with the firm’s nearly 14,000 advisors in more than 500 branch offices nationwide are not affected. Morgan Stanley will continue to offer those clients a full suite of online services.

“Our clients tell us the customized advice and personal service they receive from their financial advisors help them navigate the complexities of the market, and that’s where we are focusing our resources,” said John Schaefer, president of Morgan Stanley Individual Investor Group. “We remain committed to online services for our full-service clients, and we will continue to enhance our online offering to ensure they have access to premier web-based services for the long term.”