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Schwab purchases of USAA assets to add 1M accounts



In the midst of the reorganization of the executive team, Charles Schwab announced that it buys brokerage and managed portfolio accounts with the US $ 1.8 billion US cash investment management company.

The deal will add 1 million accounts and $ 90 billion in broker platform assets. Schwab will also act as the exclusive asset management and brokerage firm for USAA members, the company said.

Custody internally for these accounts was probably an important part of the reasoning behind the agreement, according to an equity research report written by analysts at William Blair before being officially announced.

Bloomberg News

The news confirms a report by Wall Street Journal earlier this month that Schwab would buy these assets for about $ 2 billion.

Schwab says it plans to offer roles to a "significant number of USA employees" to continue serving its members. However, specified USA spokesman Matthew Hartwig brokerage intends to offer roles to at least 400 USA employees.

USAA will consider another 400 employees for other roles. Nevertheless, about 350 employees can lose their jobs because of the agreement, Hartwig said in an e-mail.

"USAA employees who do not become members of Schwab or USAA Life Company or are not offered a new position within the USA, will be treated with great care and receive dedicated support through a variety of benefits and transition services," he said

The transaction is expected to end in 2020, subject to customary regulatory approvals and conditions, according to the companies. Conversion of USAA's brokerage services and managed portfolio accounts to Schwab's platform will take place after termination.

] reorganization within Schwab's management team, where two executives leave the firm this week, Schwab says it expects the transaction to be modestly accretive to EPS on a cash basis after year one and on a GAAP basis after year 2. Some revenue synergies are expected from the transaction. , primarily driven by the transfer of client cash to the Schwab balance, according to the company.

A spokesperson f or Schwab did not respond to an immediate request for further comment.

USAA services more than 13 million current and former members of the US military and their families, the company said.

"We have long admired USAA's mission to strengthen the financial security of our country's military officials and women and their families," said Schwab's CEO Walt Bettinger in a statement.


  Jessica Mathews

Jessica Mathews

Jessica Mathews is assistant editor of Financial Planning, On Wall Street and Bank Investment Consultant. Follow her on Twitter at @jessicakmathews.


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