- US stock brokerage and wealth manager Charles Schwab has announced a round of job cuts as part of its ongoing integration of TD Ameritrade, which it acquired in the summer of 2020.
- Schwabs’ expectation at the time was that the two businesses would be integrated by 2024 and the latest job cuts are part of that process.
- Schwab will cut up to 2,154 jobs from its overall headcount of just under 36,000 staff.
Charles Schwab Jobs Cuts
The broker said in August that was likely to cut staff numbers and downsize office locations and space, as part of a plan to achieve $500 million in annual cost savings.
However, it also said at the time, that the business would initially incur additional costs of $400 to $500 million arising from compensation and benefits due to former staff members, and the cost of exiting its existing office space commitments.
The broker also indicated that it would raise $2.50 billion in the debt markets.
Industry slow down
As well as the ongoing integration of TD Ameritrade, in common with many other brokers and banks, Schwab has had a tough 2023.
It saw a run on deposits, in the wake of the collapse of Silicon Valley Bank. It has seen a drop off in client activity and has had to cope with sharply rising interest rates, after a prolonged period of ultra-low rates, and easy monetary policy from the Federal Reserve.
As a result, net interest revenue at the firm fell by -24% in the third quarter this year, compared to the year before.
That drop was partly driven by a -28% fall in deposits to $284.40 billion, and a -13% drop in net revenues to $4.60 billion, compared to Q3 2022.
In an emailed statement a Schwab spokesperson said of the job cuts:
“These were hard but necessary steps to ensure Schwab remains highly competitive, with industry-leading levels of efficiency, well into the future,”
Adding that
“We worked diligently to ensure affected employees were treated with care and respect throughout this difficult process.”
TD Ameritrade integration
Prior to this most recent announcement, Schwab had already made 1200 job cuts since it acquired TD Ameritrade.
However, it’s not alone in reducing its headcount, investment bank Goldman Sachs has cut 3400 jobs this year, whilst Morgan Stanley and Bank of America have also made similar headcount reductions.
Research from recruitment specialists Challenger Grey & Christmas suggests that job losses in the US financial sector total more than 40,000 in 2023 three times higher than the numbers seen in 2022.
The job losses at Charles Schwab were expected in the wake of TD Ameritrade acquisition, and are only now coming to fruition, three years after that deal was struck.
That’s quite a period of grace in the financial markets, which can be ruthless when it comes to rationalisation and mergers.
Schwab is a huge business and a national and international brand. However, looking at the headcount, even after the latest cuts, you have to feel that staff numbers are still top-heavy, and therefore we may not have seen the last pink slips at the business.
With over 35 years of finance experience, Darren is a highly respected and knowledgeable industry expert. With an extensive career covering trading, sales, analytics and research, he has a vast knowledge covering every aspect of the financial markets.
During his career, Darren has acted for and advised major hedge funds and investment banks such as GLG, Thames River, Ruby Capital and CQS, Dresdner Kleinwort and HSBC.
In addition to the financial analysis and commentary he provides as an editor at GoodMoneyGuide.com, his work has been featured in publications including Fool.co.uk.
As well as extensive experience of writing financial commentary, he previously worked as a Market Research & Client Relationships Manager at Admiral Markets UK Ltd, before providing expert insights as a market analyst at Pepperstone.
Darren is an expert in areas like currency, CFDs, equities and derivatives and has authored over 260 guides on GoodMoneyGuide.com.
He has an aptitude for explaining trading concepts in a way that newcomers can understand, such as this guide to day trading Forex at Pepperstone.com
Darren has done interviews and analysis for companies like Queso, including an interview on technical trading levels.
A well known authority in the industry, he has provided interviews on Bloomberg (UK), CNBC (UK) Reuters (UK), Tiptv (UK), BNN (Canada) and Asharq Bloomberg Arabia.
