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Last updated: January 18, 2013 12:00 am
E*Trade has turned to a former top banker at Barclays to turn round its business, naming Paul Idzik as its fifth chief executive since 2007.
Mr Idzik will take over the top job at the US online retail brokerage and join the board next week, the company said.
He will be faced with the task of extricating the company from the problems it still faces from the US financial crisis. E*Trade has been shrinking its mortgage loan portfolio, which ballooned to more than $30bn and later soured as the housing bubble burst.
It has also tried to rebuild its brokerage business, the fourth-largest in the US by daily average revenue trades behind Interactive Brokers, TDAmeritrade and Charles Schwab.
“Paul is recognised in the financial services industry for his strong leadership skills and his demonstrated ability to deliver results,” said chairman Frank Petrilli who has served as interim chief executive since August after the board sacked Steven Freiberg.
E*Trade decided late last year to remain independent after giving up on plans for a sale amid poor market conditions.
The company’s board has already been reshaped by its largest shareholder, Citadel LLC, after Ken Griffin, head of the investment firm, pushed for changes. Citadel declined to comment.
Analysts at Sandler O’Neill said the company had stabilised its loan portfolio and had about $10.5bn in mortgages remaining.
“Putting the legacy mortgage portfolio squarely in the rear view mirror will likely be the top priority for the incoming leadership,” said David Trone at JMP Securities.
Mr Idzik served as chief operating officer at Barclays under Bob Diamond when he was chief executive.
In 2009 he was brought in by DTZ to restructure the UK-based estate agency. In spite of a round of harsh cost-cutting, the company continued to run at a loss.
Mr Idzik left DTZ in 2011 during a takeover bid by its largest shareholder, Saint Georges Participations. Within months the company had fallen foul of the financial crisis and was placed into administration and delisted. It was bought by UGL, the Australian support services company.
Tom Joyce, chief executive of Knight Capital , had been suggested as a possible candidate for the position at E*Trade but encountered opposition from some board members.
Mr Joyce famously clashed with Mr Griffin in August as the latter sought to acquire a stake in Knight after a $460m trading glitch left it searching for a lifeline.
Last month, high-frequency trading company Getco acquired Knight in a $1.8bn reverse takeover, and said Mr Joyce would serve as executive chairman of the combined company.
In 2008 E*Trade brought in Donald Layton, a former vice-chairman at JPMorgan Chase, to help clean up its mortgage portfolio. Mr Layton retired at the end of 2009 and was replaced on an interim basis by then chairman Robert Druskin. Mr Freiberg, a Citigroup veteran, took over as chief executive in April 2010.
E*Trade shares rose 0.10 per cent to $9.87 in New York.
Additional reporting by Dan Thomas
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