Wells Fargo's online brokerage to offer more free trades

SAN FRANCISCO (AP) — Wells Fargo & Co. on Tuesday became the latest big bank to undercut online stock brokers with a new incentive package that promises to waive Internet trading fees for more customers more often.

Customers who have combined $25,000 in deposits or loans at Wells will qualify for up to 100 free online trades annually of stocks, no-load mutual funds and exchange traded funds, or ETFs. If a borrower has a home mortgage, only 10 percent of the debt will be counted toward the $25,000 minimum needed to qualify for the free online trades.

By including loan balances and mutual fund trades in its package, Wells Fargo hopes to upstage rival Bank of America Corp., which in October unveiled plans to give away up to 360 free online stock trades annually to customers with at least $25,000 in deposits.

San Francisco-based Wells Fargo said its free online trading offer is available to eligible customers nationwide immediately. Charlotte, N.C.-based Bank of America has been gradually introducing its free online trading offer, with plans to complete the rollout during the spring.

The Bank of America free offer so far hasn't fazed leading online brokers like Charles Schwab Corp., E-Trade Financial Corp. and TD Ameritrade Holding Corp. because it required such a large deposit commitment. Those brokers typically charge $9.99 to $12.99 per trade.

By some industry estimates, Bank of America's online brokerage division opened just 9,000 new accounts in the fourth quarter. Ameritrade, in contrast, gained 69,000 new brokerage accounts during the same three-month period.

Wells Fargo's offer is likely to have a bigger impact because customers with mortgages of at least $250,000 will be able to get 100 free trades annually, said online brokerage analyst Adam Honore of the Aite Group.

"This program has some teeth to it," Honore said. "It will help Wells Fargo and hit Schwab where it hurts."

Representatives from San Francisco-based Schwab, New York-based E-Trade and Omaha, Neb.-based Ameritrade each said their brokerages have no plans to lower their fees in response to Wells Fargo's offer.

"Customers are motivated by the total value of an offering," E-Trade spokeswoman Pam Erickson said. "The best combination of product, price and service wins."

Although the free-trading offers from Wells Fargo and Bank of America are unlikely to change the balance of power among online brokers, Forrester Research analyst Bill Doyle believes the promotions will force the industry's prices to come down as the big banks advertise their programs.