The firm’s stock drops over 20% as fears of a banking crisis mount
© Rafael Henrique/SOPA Images/LightRocket via Getty Images
Shares in the US financial and brokerage company Charles Schwab tumbled on Monday, as concerns rippled through the financial sector due to the recent collapse of tech and start-up-focused Silicon Valley Bank and crypto-related Signature Bank.
The Texas-based financial services corporation’s stock slumped by more than 20% during Monday trading, representing the company’s worst one-day sell-off since April 2000.
The wipeout came as the company touted its resilience after a reported 28% decline in average margin balances in February from a year earlier. In a statement, Schwab’s Chief Financial Officer Peter Crawford reassured shareholders and clients that cash outflows hadn’t accelerated this month compared to February, noting that 80% of the brokerage’s deposits are insured by the US government.
“These outflows reflect a continuation of client decisions to reallocate a portion of their cash into higher-yielding cash alternatives within Schwab,” he wrote. “Based on our ongoing analysis of these trends, we still believe client cash realignment decisions will largely abate during 2023.”