Schwab to Shut 53 More Branches

Charles Schwab Corp. said Wednesday that it planned to close 53 more branches and that it had laid off an additional 245 workers, beginning an upheaval that the brokerage firm telegraphed last week when it abruptly changed CEOs.

The office closures represent 16% of Schwab’s 339 branches across the country. The retreat will leave Schwab with fewer than 290 branches, down from about 400 three years ago.

Schwab plans to upgrade some of its branches and may open new ones in some markets, but those plans haven’t been finalized, company spokesman Glen Mathison said.

The San Francisco-based company fired about 65 workers in its technology division this week and 180 other employees in preparation for the branch closures, Mathison said. With the latest cuts, the company has about 16,200 employees.

The makeover represents the first significant steps in Schwab’s bid to trim $150 million to $200 million from its expenses by the end of this year.

The brokerage set the cost-cutting goal last week after ousting David Pottruck as its chief executive and reinstalling founder Charles R. Schwab in that post to rejuvenate the company.

The change in command coincided with the announcement of a disappointing second-quarter profit that reversed a recent recovery from a prolonged slump that began in early 2001, shortly after the dot-com bust ravaged the stock market.

Before the latest shake-up, Schwab already had lowered its costs by laying off nearly 10,000 employees, or about one-third of the workforce, and closing dozens of the offices. But industry analysts say that housecleaning didn’t lower costs enough for Schwab to remain competitive with leaner online brokers such as Ameritrade Holding Corp. and E-Trade Financial Corp., which have lured away customers by offering better deals.

Schwab tried to boost its business through a series of acquisitions designed to sell more services to wealthier investors, but that expansion hasn’t paid off, analysts said. Many longtime customers grew disenchanted with new fees that seemed to distance Schwab from its roots as a discount broker.

Schwab fell 9 cents to $8.63 on the New York Stock Exchange.

Schwab probably will have to make far more painful cuts, predicted analyst Matthew Snowling of Friedman, Billings, Ramsey & Co. “It could get ugly,” he said. The company’s founder “is going to have to dismantle the company and put it back together again.”