“Charles Schwab Corp. shares suffered their biggest intraday drop since the depths of last year’s regional-bank crisis after the investing giant warned it will have to shrink itself in order to protect profits.
Going forward, Schwab is planning to rely more on off-balance sheet arrangements to house customers’ deposits, Chief Executive Officer Walt Bettinger said on a conference call with analysts. By relying on partners like Toronto-Dominion Bank, such deals would allow Schwab to more efficiently use capital, he said.
“These various actions should lead — again over time — to a bank that is somewhat smaller than our bank has been in recent years, while retaining the ability to meet our clients’ banking needs, lower our capital intensity and, importantly, protect the economics we’re able to generate from owning a bank,” Bettinger said.
“This definition of a transition year is being realized,” Bettinger said. “All of these issues position us for a strong period of growth in client metrics and financial results in the coming years.”
Shares of the company plummeted 7.5% at 9:36 a.m. in New York, the biggest intraday drop since March 2023 and one that made it the worst performer in the S&P 500 Index. The stock had risen 9.1% this year through the close of trading on Monday.
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