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Home / Business / Charles Schwab for cutting 600 employees, or about 3% of the staff

Charles Schwab for cutting 600 employees, or about 3% of the staff



Charles Schwab

Corp cuts around 600 jobs when it comes to the impact of lower interest rates.

Chief Executive

Walt Bettinger

discussed the upcoming layoffs, which will make up about 3% of San Francisco staff, in a recent City Hall with some staff, according to one attendee. The cuts are part of an effort to cut costs as falling interest rates squeeze profits by Schwab's bank arms, people familiar with the situation said.

"We initiated a process to review our spending base to ensure that we remain well-positioned to serve customers as they navigate an increasingly challenging financial environment," said a Schwab spokeswoman.

The cuts are expected as soon as next week.

Schwab's interest-sensitive bank is a major part of its business. It accounted for more than half of the company's total revenue of $ 1

0.13 billion last year, up from about a quarter in 2009.

The move from Schwab comes as companies across Wall Street and beyond, tackling a shift in Federal Reserve policy that surprised some people. After keeping interest rates near zero for many years after the 2008 financial crisis, the Fed began lifting them at the end of 2015. Banks and brokerages reaped the benefits and increased lending rates while keeping interest rates on customers' cash low.

Concerns to slow economic growth and trade policy spurred the Fed to turn its course, cut interest rates this summer and signal that it would do so again.

Another leader of Schwab, in a separate meeting with employees, said Schwab was wrong in its interest rate forecasts and did not expect the Fed to cut interest rates, according to a person at the meeting.

The move from Schwab comes less than two months after it entered into an agreement to buy assets in USAA's investment management firm, including brokerage and managed portfolio accounts, for $ 1.8 billion. With the acquisition, Schwab is intended to go deeper into retail financial advice, which for some customers offers a free management fee. It has been able to do that in part because these clients are required to keep part of their investment portfolio in cash, which was lucrative when interest rates were higher.

Many of the eliminated jobs are expected to be in retail that includes Schwab's financial advisors and others who work with clients to manage investments, the people said, even though the cuts are not limited to that part of the business.

In July, Schwab released two top executives, one of whom ran the retail business.

Write to Lisa Beilfuss at lisa.beilfuss@wsj.com

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