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Schwab to Take Charges, Cut Jobs

The firm's restructuring includes eliminating about 250 workers and closing some branches.

August 13, 2003|From Reuters

Charles Schwab Corp. said Tuesday it would make another downsizing move, as it tries to keep costs in line with lower stock trading by its customers.

The biggest discount broker plans to take $35 million to $50 million in pretax restructuring charges in the second half of this year and cut about 250 jobs.

Schwab, based in San Francisco, has been slashing costs in recent years as the bear market has caused many investors to pull back from stocks.

The company said the new charges included the cost of consolidating some branch offices. Schwab had 372 branches at the end of June and probably would shut about 20 by October, spokesman Glen Mathison said.

Though Schwab's trading activity has improved this year, "we remain vigilant on our expense base," Mathison said.

At the end of June, Schwab had 16,100 employees. The new job cuts come on top of 400 it eliminated during the second quarter. Schwab has cut about 10,000 jobs since its workforce peaked at 26,300 in 2000.

Asked if further restructuring charges or job cuts might be in the works, Mathison said: "This would be the extent of what we envision at the current time."

Schwab said in a filing with the Securities and Exchange Commission that it also expected "selective hiring in certain areas" would offset some of the cuts. One area in which the company has been adding staff is its institutional trading arm.

Last month, Schwab reported second-quarter net income of $126 million on revenue of $1.02 billion. That compared with earnings of $98 million in the year-earlier period, when revenue totaled $1.04 billion.

Schwab shares rose 50 cents to $10.75 on the New York Stock Exchange.

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