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Wed March 30, 2005 2:25 PM GMT-05:00

TORONTO (Reuters) – Bank of Montreal said on Wednesday Harrisdirect, its online discount brokerage, is not meeting its financial expectations, but it will not give up on it. “While it is not currently meeting our financial performance expectations, we are actively engaged in improving performance and it provides us with a wealth management distribution channel in the U.S.,” Tony Comper, BMO’s chief executive, said in prepared remarks at an investors conference in Montreal

The bank recently streamlined its business model for Harrisdirect, in hopes that the changes will bring it in line with its targets.

“We believe Harrisdirect is a valuable component of our U.S. wealth management offering and that its contribution to our operating results will grow over time,” Comper said.

The bank does not break out Harrisdirect’s financial performance separately from its U.S. private client group unit.

Earlier this year, analysts were looking to see if Canada’s fourth-largest bank by market capitalization would signal willingness to sell Harrisdirect. One analyst said the bank could probably get $700 million by spinning off the unit.

Comper also repeated the bank’s desire to quicken the pace of its U.S. acquisitions in the midwest region to complement its Harris Bank unit, and said BMO could spend more than $2 billion, or less than 10 percent of its market cap, to grow.