Bloomberg News

Schwab Says Not Interested in Buying ‘Balance Sheet Challenges’

October 26, 2011

Oct. 26 (Bloomberg) -- Charles Schwab Corp. Chief Executive Officer Walt Bettinger said the U.S. brokerage wouldn’t aim to buy companies with “balance sheet challenges” that could hurt his online brokerage’s earnings growth.

“We’re not anxious to take on balance sheet challenges that run the risk of derailing the long-term opportunity for us to deliver to shareholders,” Bettinger said today during an update on the San Francisco-based company’s business. “I can’t imagine us considering seriously something that would put that earnings growth at risk down the line.”

E*Trade Financial Corp., a Schwab competitor, hired Morgan Stanley in July to consider strategic options including a company sale. E*Trade shares had plunged 94 percent in four years following more than $3 billion of mortgage losses. In July, analysts at Raymond James Financial Inc. and Sandler O’Neill & Partners LP said Schwab and TD Ameritrade Holding Corp. would be the most likely buyers of E*Trade.

Schwab completed its acquisitions of OptionsXpress Holdings Inc. last month, adding the retail options brokerage founded in 2000 to its equity and mutual fund holdings. Citadel LLC, E*Trade’s largest shareholder, has been pushing this year for the New York-based firm to consider a sale to maximize shareholder value after what it called “catastrophic losses.”

--Editors: Nick Baker, Stephen Kleege

To contact the reporter on this story: Whitney Kisling in New York at wkisling@bloomberg.net.

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net.


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