Charles Schwab lost $3 billion after brokerage stocks fell

  • Billionaire Charles Schwab’s net worth has dropped about $3 billion since March 8.
  • Shares of Charles Schwab Corp fell sharply amid the collapse of Silicon Valley Bank.
  • Investors are worried as Charles Schwab Corp is sitting on a significant amount of unrealized losses on its bond assets.

Billionaire Charles Schwab’s fortunes have taken a huge hit after shares of the eponymous company he founded plunged amid the banking crisis.

Shares of Charles Schwab Corp, a savings and loan holding company, closed down 11.6% at $51.91 apiece on Monday, sending its market value down nearly 38% until now this year.

As Founder Schwab has much of his fortune tied to a 6% stake in the company, the billionaire has seen $2.9 billion wiped from his fortune since March 8, when the Bank of Silicon Valley, or SVB, the situation began to deteriorate, Bloomberg.

The 85-year-old tycoon, who is the 183rd richest person in the world, is now worth almost $10 billion after 26% of his wealth was wiped out so far this year, according to the Bloomberg Billionaires Index.

Schwab’s losses as of March 14 mean his wealth has fallen the most among US billionaires so far this year. He leads the losses only behind Indian billionaires Gautam Adani and Mukesh Ambani, who suffered a string of losses following a US short seller attack on Adani’s business empire.

Investors worry about huge unrealized bank losses

Since the SVB implosion, investors have become increasingly concerned about the huge unrealized losses banks are sitting on in their bond portfolios.

Charles Schwab Corp, although best known for its discount brokerage business, also provides banking and loan services.

The bank issued a combined nearly $28 billion in unrealized losses as of December 31, on its held-to-maturity and available-for-sale bond portfolios, by its annual 10-K depositwhat causes concern – it is because investors fear that Charles Schwab Corp will go the way of SVB if it is forced to sell its bonds at a loss.

Charles Schwab Corp even sought to assuage investor jitters in a Monday statement, saying it has enough liquidity to withstand any volatility.

Peter Crawford, CEO of the company, said in the statement that the company has access to “significant liquidity”, including approximately $100 billion in cash flow and more than $300 billion in additional capacity with the Federal Home Loan. Bank and other short term facilities.

“Given our significant access to other sources of cash, there is very little chance that we will need to sell them before they mature,” Crawford added.

More than 80% of its bank deposits also come under the Federal Deposit Insurance Corporation insurance limits which is $250,000 per depositor, per insured bank, for each category of account holder he added.

The firm added in the Monday Statement it held $7.38 trillion in client assets and 1.7 million bank accounts at the end of February.

Shares of Charles Schwab rebounded 3.4% in after-hours trading Monday.

Charles Schwab Corp did not immediately respond to Insider’s request for comment sent outside of normal business hours.

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