Just days after it opened a walk-in branch in New York City, CSFBdirect, the mostly electronic brokerage arm of Credit Suisse First Boston, said that to reduce costs it would close its Parsippany, N.J., call center and cut jobs at other call centers that handle customers trading securities.
The company said 150 jobs will be lost in the United States, or 10% of the domestic work force. CSFBdirect will take a one-time, pretax charge of approximately $9 million in the first quarter, but said that the annual cost savings would amount to $11 million.
CSFBdirect had employed 125 in Parsippany, and has call centers at its home office in Jersey City, Charlotte, N.C., and Salt Lake City. Twenty-five positions will be eliminated from the three other centers.
Blake Darcy, CSFBdirects chief executive officer, said the layoffs are intended to help the company weather the ongoing market volatility that has kept retail investors frozen on the sidelines. We were hoping that volumes would pick up again as we got into the first quarter but that has not happened, Mr. Darcy said in an interview Wednesday.
The staff cuts come as several other discount brokerages look to slash costs by enforcing hiring freezes and clamping down on discretionary spending such as travel. We hope that these are the last cuts we have to make but weve told people here that we dont want to make any guarantees, Mr. Darcy said.
The chief executive said the brokerage will continue its strategy to open more branches, with as many as 20 planned for this year. Eventually, the company plans to establish as many as 100 locations.
The layoffs and the bid to create a physical presence are fairly unrelated, Mr. Darcy said. But, he added, Were clearly trying to redirect a little bit and we believe the branches will be the next catalyst for growth.
Gathering assets in volatile markets may be easier with a bricks-and-mortar presence, when people are looking for more hands-on treatment from their broker, said Gregory Smith, an equity analyst with J.P. Morgan H&Q. People need to know that they can walk into a branch if they want to, that there is someone they can meet with there, Mr. Smith said.