Charles Schwab CEO says firm could operate in case of deposit flight - WSJ

By Scott Kanowsky 

Investing.com -- Charles Schwab Corp's (NYSE:SCHW) chief executive officer pushed back against concerns that it may become swept up in a crisis engulfing the banking industry, saying in an interview with the Wall Street Journal on Thursday that the financial services firm could still operate even it were to lose most of its deposits.

According to the report, CEO Walt Bettinger said there would still be a "sufficient amount of liquidity" available if all of its deposits in its banking unit disappeared. The company, he added, would not have to "sell a single security."

Bettinger told the paper that any potential funding gaps could be filled through the collection of interest payments on bonds it owns, borrowing from the Federal Home Loan Bank, or by issuing certificates of deposit.

The comments come after Bettinger said last week that the business is still seeing significant levels of asset inflows. He also revealed that he bought 50,000 shares in Charles Schwab for his personal account - a purchase worth about $3 million at the time.

Shares in the tenth-largest U.S. bank have shed around a fourth of their value since Silicon Valley Bank collapsed on March 8, sending shockwaves through the global banking system and leading investors to seek out other lenders who are seeing heavy withdrawals and paper losses on bond holdings.

Like SVB, Schwab invested in long-term bonds which have seen a sizeable chunk of their value fall as the Federal Reserve raises interest rates from near-zero in a bid to curb inflation. However, Bettinger told the WSJ that steps were taken to prepare for this situation, adding that it has around $100 billion from cash on hand, interest payments on bonds it holds, and expected net new assets.