Schwab jobs on the line after British arm sold to Barclays

Charles Schwab, the world's biggest discount stockbroker, is to quit Britain, selling its operations here to Barclays in a deal that is likely to lead to swingeing job cuts.

Barclays will beef up its UK broking by buying Charles Schwab Europe, an execution-only stockbroker, which will be merged with its own retail equities business arm.

Charles Schwab Europe employs about 400 staff across its two sites in Birmingham and Milton Keynes while Barclays Stockbrokers employs about 500 across its operations in Glasgow and Peterborough.

Barclays said yesterday it planned to close the Charles Schwab sites in the second half of 2003 and move the operations to Glasgow and Peterborough but would not comment on how many staff would be affected. Nevertheless, Bob Hunter, the chief executive of Barclays Private Clients, said he expected "significant" efficiency gains from combining the businesses.

The deal also gives Barclays Stockbrokers a further 150,000 client accounts in the UK, boosting its total number of execution-only client accounts to about half a million.

"By combining the UK's largest stockbroker with the player offering the best online service in the country we will expand the breadth and quality of investment services that we can offer," Mr Hunter said.

Neither side would comment on the value of the cash deal but Barclays said it was "well below materiality", or less than 5 per cent of group profits.

Charles Schwab hinted yesterday that it was pulling out of the UK market as it was too competitive given the backdrop of current market conditions. "We cannot ignore the fact that we are operating in a very difficult market," William Atwell, the executive vice president at Schwab International, said.

"As we looked to the future, it became clear that we could not achieve our market share goals in the UK without an acquisition or a significant investment in the expansion of our pound sterling services to a fuller offering integrated with banking," Mr Atwell said.

He said the company had reached the "difficult conclusion" that such an investment "did not make sense" at the current time. "However, in line with our corporate strategy, we will continue seeking to aggressively grow our US dollar business in the UK and elsewhere."

Charles Schwab first opened in the UK in 1992 and went on to buy Sharelink three years later. In 1998, it launched an online dealing service.

Separately, Charles Schwab said yesterday that its founder, Charles Schwab, was giving up his role of co-chief executive but would remain as chairman. The company named David Pottruck, also co-chief executive, as its sole chief executive.

Mr Schwab said: "It is important in today's environment that the positions of CEO and chairman be distinct."