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Charles Schwab quits UK
by Gavin Lumsden on Jan 31, 2003 at 17:24
Charles Schwab, the US financial giant, has pulled out of the UK and sold its broking business to Barclays for an undisclosed sum.
The sale of Charles Schwab Europe ends the US firm's 11-year strategy of trying to expand in the UK and signals how tough life is getting for stockbrokers in the fourth year of a bear market.
William Atwell, executive vice president of Schwab International, said: 'We cannot ignore the fact that we are operating in a very difficult market. As we looked to the future it became clear that we could not achieve our market share goals in the UK without an acquisition or a significant investment.'
He added: 'Ultimately we reached the difficult conclusion that such an investment did not make sense for our firm at this time.'
Neither side would disclose the terms of the deal only to say the Charles Schwab Europe has net tangible assets of £17 million.
However, there is no doubt the deal consolidates Barclays' position as the country's biggest retail stockbroker, giving it an additional 150,000 customers, swelling its total client base to 500,000 execution-only customers.
Charles Schwab's offices in Birmingham and Milton Keynes will close in the second half of the year and be integrated into Barclays Stockbrokers' operations in Glasgow and Peterborough. The 400 Charles Schwab staff will be offered the chance to relocate.
The bank assured investors with both Barclays Stockbrokers and Charles Schwab Europe that it would be 'business as usual' for the next 'six to nine months'.
A Barclays spokeswoman promised Charles Schwab customers that their commission rates would not be raised, although the bank has not yet considered how to integrate both companies' charging systems.
She denied that this was a strange time to expand Barclays broking operation as the acquisition was being made 'towards the bottom of the market' and was a cheap way of acquiring new customers.
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