Trying to cope with a 50 percent drop in client activity, The Charles Schwab today said it would lay off 2,000 to 2,400 employees by the end of October and cut back on its systems hardware.
This is the second round of layoffs for the San Francisco-based-discount brokerage. In March, Schwab cut 3,400 jobs, or 11 percent to 13 percent of its workforce.
The cutbacks involve 1,600 to 1,900 full-time employees and about 200 contractors by the end of October, plus a reduction of 200 to 300 full-time employees through attrition. Schwab plans to take a pretax charge of about US$225 million to reflect the restructuring, the company said.
The continued decline in the stock market has resulted in a 50% drop in trading activity by Schwab clients since January, the company said. The average number of trades per day has dropped from 281,000 in January to 112,000 earlier this month.
That slowdown in trading means that by year's end the company will have shed a quarter of the staff it had in January, the announcement said, "as well as the removal of certain systems hardware from service." That hardware includes data storage, transmission, routing and middleware systems, according to Schwab spokeswoman Jennifer Hallahan.
Hallahan didn't have specifics on how the systems would be affected. She also couldn't say how many IT workers would be laid off. Schwab has been very heavily IT-oriented during the past three to four years, as it has become the top online brokerage.
In today's announcement, Schwab president and co-chief operating officer David S. Pottruck said, "We also remain focused on expanding the trading and administrative support services available to the investment managers who use Schwab, including improvements to their business management and client service technology, and we're expanding the wealth management services and investment alternatives available to them and their clients."