Charles Schwab to Cut 600 Employees

By WSJ City 

San Francisco brokerage Charles Schwab is cutting about 600 jobs, which would amount to roughly 3% of its staff, as it deals with the impact of lower interest rates.

KEY FACTS

--- The cuts are part of an effort to rein in expenses as falling interest rates pinch profit.

--- They are expected as soon as next week.

--- Many are expected to be in the retail division.

--- Schwab's rate-sensitive bank made up more than half its overall revenue of $10.13bn last year.

--- One executive said Schwab was wrong in its interest-rate forecasts and hadn't expected the Fed to cut rates.

--- Less than two months ago it struck a deal to buy assets of USAA's investment-management firm for $1.8bn.

--- With the deal, Schwab is set to move deeper into the retail financial-advice business.

"We initiated a process to review our expense base to ensure we remain well-positioned to serve clients while navigating an increasingly challenging economic environment.

Schwab spokeswoman

Why This Matters

The move by Schwab comes as firms across Wall Street and beyond grapple with a shift in Federal Reserve policy. After holding interest rates near zero for years after the 2008 financial crisis, the Fed began lifting them in late 2015. Banks and brokerages reaped the benefits, raising lending rates while keeping interest on clients' cash low.

Concerns over slowing economic growth and trade policy spurred the Fed to reverse course, cutting rates this summer and signaling it would do so again.

A fuller story is available on WSJ.com

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(END) Dow Jones Newswires

September 11, 2019 04:05 ET (08:05 GMT)

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