Charles Schwab clients are withdrawing $8.8 billion from the main funds this week

(Bloomberg) – The Charles Schwab Company. It saw $8.8 billion in net outflows from major money market funds this week as investors scrutinized the brokerage firm’s resilience amid questions about the health of the broader financial industry.

Customers have withdrawn money from two Schwab Value Advantage Money funds, which total $195 billion in assets as of March 15, marking the largest redemptions in at least six months, according to company data compiled by Bloomberg. The data covers the three days through March 15.

According to company data, Schwab’s government and Treasury funds saw inflows on each of the three days, while its main funds were outflows.

Affected by the collapse of Silicon Valley Bank, Charles Schwab plummeted more than 30% in three days. The stock price was once as low as $47 on March 13, a two-year low.

Charles Schwab’s floating losses

As the largest brokerage company in the United States and the eighth largest bank by market value, Charles Schwab has total assets of 551 billion, and about 60% of its assets are invested in securities portfolios. As of the end of 2022, it had $7.05 trillion in client assets and 33.8 million active brokerage accounts.

Industry analysts pointed out that with the soaring interest rates, holding securities has become a key risk point. Barclays said banks held unrealized losses in HTM securities totaling more than $600 billion. The risk of Charles Schwab is naturally nearly three times higher than the average bank.

The scale of available-for-sale financial assets (AFS) held by Charles Schwab is 24 times that of tangible equity, ten times larger than that of SVB, and the floating loss is 10 billion higher than that of SVB. And its floating loss of financial assets held to maturity (HTM) reached 2.35 times of tangible equity, double that of SVB. In other words, if SVB loses one of itself by throwing away these held assets, it will lose at least two of itself.

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