MutualFundWire.com
The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication
an InvestmentWires' Publication
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MutualFundWire.com
The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication |
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Monday, April 28, 2003 Schwab Becomes a Banker Charles Schwab is set to go into retail banking. The San Francisco-based company received the green light on its application from banking regulators earlier this month and this morning said it would be opening the doors on Charles Schwab Bank. The move to diversify its business comes as retail trading, the backbone of Schwab's business, has tailed off during the bull market. It also mimics a move by E*Trade into banking. While the move may diversify its revenues, the effort also risks unfocusing top Schwab executives at a key moment in the firm's history. Earlier this year founder Charles Schwab handed his half of the CEO office to David Pottruck. The firm is also still adjusting to waves of layoffs over the past two years. This also is not the first time that Schwab has tried to get into the lending business. During the dotcom boom it purchased a stake in E-Loan. It sold that stake last November as part of what Schwab officials explained as a move to focus on core businesses. Schwab was also a subsidiary of Bank of America. In 1997, Charles Schwab repurchased the firm from the bank at the height of the California real estate recession that preceded the nineties' bull market. Pottruck said that the bank will initially specialize in home mortgage loans and will use its advisor network to help distribution. To build awareness of the bank, Schwab will offer "best price guarantees" as part of their strategy to win over customers. Pottruck said the decision to offer mortgages was part of an effort to "focus on products and services that clients say they want most." "Our clients have told us that when it comes to mortgages, they're tired of confusing terms, hidden fees and inconsistent service. Schwab Bank's value proposition is clear: you will know what it will cost, you will know there is a best price guarantee, and you will receive a loan decision within 24 hours," said Pottruck. Schwab Bank is promising to beat any lender's total price by $100 or it will give consumers $500 ($750 in California) if they close with another lender. It is also guaranteeing that it will approve a loan decision within 24 hours or pay consumers $250. Lastly, it promises to meet the agreed upon closing dates or reduce a homebuyer's interest rate by 1/8 of one percent for the life of the loan. Printed from: MFWire.com/story.asp?s=5043 Copyright 2003, InvestmentWires, Inc. All Rights Reserved |