Charles Schwab exits Japan and Australia

Charles Schwab exits Japan and Australia

Charles Schwab has signalled a retreat from underperforming overseas markets with the closure of its Japanese retail brokerage joint venture with Tokio Marine & Fire Insurance Company, and the sale of its Australian accounts to TD Waterhouse.

The Japanese joint venture company was formed in September 1999 with Charles Schwab holding 50%, Tokio Marine owning 35%, and the remaining held by the Mitsubishi financial group. However, it failed to debut until April 2000, by which time the market for online brokers was already sated and competition intense.

CSTM posted a pretax loss of 3.7 billion yen in the year ended March 31, 2001, representing more than half of its 7.25 billion yen capitalisation.

Charles Schwab says it will shut its two branch offices later this month. Its 24-hour call centre will continue operations until the end of January. By February the venture's paltry 9000 customer accounts will be transferred to DLJDirect, a Japanese online brokerage backed by Credit Suisse and the Sumitomo banking group. Its assets will be retained by Tokio Marine.

News of the retreat from Japan was quickly followed by an announcement from Schwab that it was to pull out of the Australian markets. Citing weak trading conditions, the broker cut a deal with TD Waterhouse for the transfer of its 51,000 Australian accounts early in the new year.

Karen Buck, TD Waterhouse's managing director in Australia, says the acquisition will boost customer accounts by 25 per cent to over 260,000.

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