Schwab cashes in on E*Trade turmoil
18 December 2007 | 6096 views | 0
Customer defections at E*Trade helped US brokerage Charles Schwab draw in $12.1 billion in new assets in November - the most in three months.
San Francisco-based Schwab says total client assets totalled $1.446 trillion as of 30 November 2007, up 18% on November 2006.
David Trone, an analyst at Fox-Pitt Kelton Cochran Caronia Waller, told Bloomberg reporters that Schwab added 74,000 new accounts in November and lost around 35,000.
Schwab's business was reportedly boosted by the turmoil at E*Trade, where investors pulled out $6 billion in November after a Citigroup analyst downgraded E*Trade to 'sell' and warned of a potential bankruptcy risk due to mortgage-related losses.
Shortly afterwards New York-based E*Trade received a $2.5 billion cash infusion from hedge-fund manager Citadel Investment Group. The firm is now looking to halt customer defections by raising interest rates on banking deposits, according to a Bloomberg report.
TD Ameritrade, another E*Trade rival - is also expected to report a jump in new clients and assets when it releases its stats for the month later this week. TD Ameritrade is currently offering as much as $300 to investors that transfer an account from a rival firm.