First Union Corp. has moved 35 of its 140 online brokerage employees to the companys retail investment unit.
Tony Matera, a spokesman for First Union, said Wednesdays change was made because volume is shifting heavily to the retail investment side as investors alter their portfolios.
But he also said that First Unions online brokerage unit, as with those at other banking companies, has been dead since the stock market started to slide.
First Union has been cutting expenses for eight months. In June, Ken Thompson, its president and chief executive officer, announced a reorganization that would shed businesses and cut staff. Jobs already have been cut in capital markets and e-commerce.
But Mr. Matera said this most recent move is nothing more than a shifting of employees. The transferred people field calls from retail investors, he said.
First Unions is not the only online brokerage to take a hit. Industry analysts said they expect weak quarterly results from all online brokerages because customer stock trading and explosive account growth have screeched to a halt.
The collapse of the Nasdaq has spooked heavy-volume day traders, so the online brokerages that attracted these do-it-yourself investors have taken a quite a hit, said W. Christopher Maxwell, a consultant at Maxwell & Associates of Rock Hall, Md. You are going to see a lot of people who were trading through those veins seeking advice or leaving the market completely.
Ameritrade Holding Corp., which has 1.4 million customers, announced Monday that it will post a higher-than-expected fourth-quarter loss of 12 to 14 cents per share and that it would lay off nearly 10% of its 2,500-employee work force. The Omaha company blamed slowing revenue and customer stock trading for the loss.
Last month Charles Schwab Corp., acknowledging a slowdown in its business, said it would cut the pay of its executives. The San Francisco company said customer stock trading in November fell 15% from the previous month.
Morgan Stanley Dean Witter & Co. downgraded Schwab on Tuesday.
Mr. Maxwell said the market downturn is not a reason for the industry to panic but should be a cause for concern among online brokers.
You are dealing with a small percentage of the overall market but a high percentage of the online side that is apprehensive, he said. In times of trouble, people want advice. They want to work through intermediaries.
