Charles Schwab tumbles as drop in margin balances fans concerns after SVB collapse

By Mehnaz Yasmin

(Reuters) – Charles Schwab on Monday reported a 28% decline in average margin balances and a 4% fall in total client assets for February, piling more pressure on the company amid fears over the fallout from the collapse of Silicon Valley Bank.

The company’s shares tumbled as much as 18% in volatile trading after markets opened with multiple halts and resumptions. They have shed 23% in the last two trading days.

The stock was last down about 10% at $52.99.

Average margin balances fell to $60.6 billion last month, while total client assets slipped to $7.38 trillion, Charles Schwab.

Meanwhile, the company sought to allay investor worries over its liquidity levels and deposits.

“More than 80% of our total bank deposits fall within the (Federal Deposit Insurance Corporation ) insurance limits,” the company said in a statement.

Charles Schwab said it has “access to significant liquidity” including an estimated $100 billion of cash flow from cash on hand, portfolio-related cash flows, and net new assets the company expects to realize over the next 12 months.

Earlier on Monday, Citigroup analysts said they do not see a material risk to deposits leaving Charles Schwab given its composition but remain concerned about whether there is sufficient liquidity on hand as client assets shift off balance sheet to other instruments.

The brokerage upgraded the company to “buy” from “neutral”, but cut the target price to $75 from $83.

The efforts to reassure investors as the implosion of SVB Financial Group stoked contagion fears. A failed share sale at the tech lender had drained $42 billion in deposits in a single day and sucked out liquidity.

U.S. lenders First Republic Bank and Western Alliance also sought to calm investor worries over their liquidity and deposits on Friday.

(Reporting by Mehnaz Yasmin in Bengaluru; Editing by Sriraj Kalluvila)