Charles Schwab to Cut 2,400 More Jobs

Leading discount brokerage Charles Schwab Corp., reeling from a continuing slide in small investors’ stock trading activity, said Thursday it will cut an additional 2,400 jobs, or 11% of its work force.

The new cuts, which follow the firing of 3,400 people in the second quarter, will result in charges of $225 million and might include reductions at Schwab’s U.S. Trust unit. Schwab expects to save $65 million a quarter in expenses with the new cuts.

“A robust recovery in investor sentiment is not imminent,” Schwab Chief Financial Officer Christopher Dodds said, explaining the firm’s decision.

The job cuts have been rumored for the last two weeks.

Dodds said Schwab’s 7.6 million customers, who have $851 billion in assets at the firm, probably won’t see a deterioration in service because the firm’s reduced capacity is a reflection of the drop in demand for services.

Pummeled by a plunge in investor activity as the stock market’s decline enters its 18th month, San Francisco-based Schwab is trying to expand its non-trading services, offering more financial advice to customers burned by falling stocks.

The firm is looking at ways to enhance its advice and guidance, Dodds said.

Many brokerages have been seeking to expand fee-generating advisory services to make up for lower trading commissions.

The firm also said it is taking steps to restore its capital markets unit to profitability. Since U.S. exchanges started pricing stocks in decimals early this year--narrowing the “spread” between bid and asked prices--revenue of market makers such as Schwab has been squeezed. The firm didn’t elaborate on its plans to boost the capital markets unit.

Schwab’s earnings have fallen three consecutive quarters and are on track to extend their slide. The streak already is a record for the 30-year-old firm.

Schwab shares fell 15 cents to $12.05 in New York Stock Exchange trading Thursday, the lowest close since late 1998. The firm has been rumored as a takeover candidate, but key executives own about a quarter of Schwab’s shares.