E*Trade: 'Significant Progress' in Cutting Risks

Online mortgage broker E*TRADE Financial said on Wednesday it made "significant progress" on reducing risks related to its balance sheet, maintaining strong capital ratios and strengthening its leadership team.

E*TRADE confirmed it expects 2007 year-end tier I and risk-based bank capital to be equal of better than 5.9 percent and 11.1 percent respectively, as reported in November.

It said it completed the sale of an additional $3 billion worth of available-for-sale securities, including a combination of mortgage-backed securities and municipal bonds, at a loss of less than $5 million.

In November, E*TRADE sold $3 billion worth of asset-backed securities. Its shares were 0.2 percent up in pre-market trade.

The company also said it reduced wholesale borrowing levels by eliminating about $3.5 billion in Federal Home Loan Bank advances and repurchase agreements from the previous quarter. It ended the year with $10.5 billion of excess borrowing capacity from FHLB.

"We have taken important steps in the execution of our turnaround plan by reducing balance sheet-related risk and maintaining strong Bank capital levels," R. Jarrett Lilien, CEO and President, said in a statement.

The full details of the turnaround plan for 2008 will be announced on January 24, when the company will also report fourth-quarter results.

E*TRADE also said it created a special committee which has the task of "aggressively reducing" the risk of its real estate portfolio. It will be led by Robert V. Burton, former vice president and head of retail credit at Wachovia .