Feeling the pinch of ongoing market volatility and its effect on the retail investor psyche, the Charles Schwab Corp. said Thursday morning that it would cut an additional 9% to 11% of its 22,300 employees, which, when added to cuts made earlier in the year, would slash a hefty 25% from its workforce.
The San Francisco brokerage company said it will axe 1,900 full-time employees and 200 contractors by the end of October. Schwab aims to cut ties with an additional 200 to 300 full-time staffers by yearend through "voluntary attrition," the company said in a press statement.
Schwab, which last month had hinted that more cuts were on the way, said these latest cost-saving initiatives include reductions in existing facilities, as well as the removal of certain systems hardware from service.
The company will take pretax charges totaling roughly $225 million over the rest of 2001 to reflect this restructuring, but estimates that it can reduce pre-tax operating expenses by approximately $65 million per quarter, commencing the first quarter of 2002.
"They've gone to great pains to try to avoid cutting," said Richard Repetto, an equity analyst at Putnam Lovell Securities in New York. "Their first cut they did very meticulously." However, Mr. Repetto said he had expected more cuts at the San Francisco company because they had staffed up so much in recent years. "They increased their employees by 30% in 2000," he said.
Among its discount peers and other financial services firms, Schwab is not alone in announcing layoffs. TD Waterhouse Group, the New York-based discount broker mostly owned by Toronto-Dominion Bank, recently said it expects to slash its staff by 30% through layoffs and attrition by yearend.