Charles Schwab to reduce headcount to bring down costs

(Reuters) – U.S. brokerage firm Charles Schwab said on Monday it plans to lower its headcount in a bid to counter cost pressures, joining a list of Wall Street firms take a similar path.

The company, however, did not disclose the number of employees it was going to lay off.

Several companies across corporate America, including Wall Street banks, have trimmed their workforce this year in a bid to rein in costs amid still-high inflation, rising interest rates and higher borrowing costs.

Schwab has had to turn to supplementary funding sources to counter an uncertain economic environment. In June, the Westlake, Texas-based company said it was relying on more expensive funding sources, such as borrowing from the Federal Home Loan Bank, to supplement its cash flow.

Charles Schwab also said it was currently assessing its real estate footprint, and that it planned to close or downsize certain corporate offices. It expects to realize about $500 million of incremental annual run-rate cost savings by undertaking these actions.

The U.S. brokerage firm said it anticipated most costs related to layoffs would be incurred in the second half of 2023.

In July, Charles Schwab reported a smaller-than-expected drop in second-quarter profit, as a jump in asset management fees helped soften the hit from a decline in interest revenue.

Earlier in the year, the brokerage said it was looking to raise up to $2.5 billion through a debt offering.

(Reporting by Jaiveer Singh Shekhawat and Granth Vanaik in Bengaluru; Editing by Krishna Chandra Eluri and Maju Samuel)