Schwab to cut up to 2,400 employees, take charge
By Brian Kelleher
NEW YORK, Aug 30 (Reuters) - Charles Schwab Corp. <SCH.N>, the top U.S. discount and online brokerage, on Thursday said it was cutting up to 2,400 employees, or 11 percent of its work force, as it continues to grapple with weak customer trading levels.
Schwab, the latest in a long line of financial services firms laying off staff, said customer trading activity is down 50 percent from the beginning of the year. The San Francisco-based company indicated it would be forced to cut jobs earlier this month and already made significant cuts this year.
Schwab, which began 2001 with 26,700 workers, said it expects its employee staffing levels to be down 25 percent by the end of the year. It said it will cut between 2,000 and 2,400 full-time staffers and said it had about 22,300 employees at the end of July. .
"Given the severity of the pullback in client activity and our outlook regarding the potential duration of this environment, we are taking further measures to improve our financial performance while maintaining appropriate capacity," founder and Co-Chief Executive Charles Schwab said in a statement.
The company said it will take pre-tax charges totaling $225 million over the rest of the year to pay for severance packages and to reduce some of its systems hardware. Schwab said the restructuring will cut pre-tax operating expenses by about $65 million per quarter, beginning in the first quarter of 2002.
A weak stock market is slashing profits at some of the nation's largest banks, brokerages and investment banks. Morgan Stanley <MWD.N>, Citigroup Inc. <C.N> and Merrill Lynch & Co. Inc. <MER.N> have all let go of staff this year to cope with the weak conditions.
Online and discount brokerages such as Schwab and rivals Ameritrade Holding Corp. <AMTD.O> and TD Waterhouse Group Inc. <TWE.N> have been particularly hard-hit because of their reliance on small retail investors.
This group has sat on the sidelines as stock markets continue to hit the skids. The Nasdaq Composite Index <.IXIC>, which includes some of the most widely held U.S. companies, is down more than 50 percent since the end of last August.
Schwab shares closed at $12.20 in Wednesday trading on the New York Stock Exchange, well below their 52-week high of $39.50 and just above a yearly low of $12.12.
11:44 08-30-01 |
