Charles Schwab Corp, an early champion of retail brokerage services, on Monday announced that it would acquire rival TD Ameritrade Holding Corp for about US$26 billion amid stiffening competition to attract small investors.
The all-stock deal creates a giant that serves clients with US$5 trillion in assets and would enable the companies to cut costs at a time when they have dropped commission fees in the face of competition from newer entrants.
“With this transaction, we will capitalize on the unique opportunity to build a firm with the soul of a challenger and the resources of a large financial services institution that will be uniquely positioned to serve the investment, trading and wealth management needs of investors across every phase of their financial journeys,” Schwab chief executive Walt Bettinger said.
In the 1970s, the two companies revolutionized the way that small investors placed their money on Wall Street by taking on big established brokerages that set the rules for such transactions and often charged handsome fees for their services.
However, the sector has been challenged over the past few years by new entrants and by new initiatives by larger banks that take advantage of mobile platforms.
Schwab last month announced that it was removing charges of US$4.95 per trade on stocks and exchange-traded funds.
Schwab’s move spurred a similar announcement by TD Ameritrade and from E*Trade Financial Corp, another rival. The shift is a response to start-ups such as Robinhood that have offered commission-free trades for the past few years.
Besides the loss of revenue from commissions, both Schwab and TD Ameritrade have also been pressured by lower interest rates.
A note from Bank of America Merrill Lynch last week following news of talks between Schwab and TD Ameritrade predicted that the deal could spur other consolidation.
Most companies in the sector are probably “in merger discussions given the pressures on the business, this transaction, game theory, as well as the attractive synergies and accretion,” Bank of America said. “Over time, if firms are left out, it could create some pressure on those stocks, and as the distribution platforms become larger, it could also create a bit more pressure for the asset management industry.”
The companies expect to cull savings of US$1.8 billion to US$2 billion through administrative, real-estate and other costs. Integration of the two companies would take from 18 to 36 months.
Shares of TD Ameritrade on Monday increased 7.58 percent to close at US$51.78 in New York trading, while Schwab had gained 2.32 percent at US$49.31.
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last
US CONSCULTANT: The US Department of Commerce’s Ursula Burns is a rarely seen US government consultant to be put forward to sit on the board, nominated as an independent director Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday nominated 10 candidates for its new board of directors, including Ursula Burns from the US Department of Commerce. It is rare that TSMC has nominated a US government consultant to sit on its board. Burns was nominated as one of seven independent directors. She is vice chair of the department’s Advisory Council on Supply Chain Competitiveness. Burns is to stand for election at TSMC’s annual shareholders’ meeting on June 4 along with the rest of the candidates. TSMC chairman Mark Liu (劉德音) was not on the list after in December last