Charles Schwab’s Top Investor Exits $1.4 Billion Stake, FT Says

(Bloomberg) — A top investor in Charles Schwab Corp. sold its entire $1.4 billion stake in the brokerage during last month’s US banking turmoil, according to Financial Times.

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Rajiv Jain’s GQG Partners had been among Schwab’s top 15 shareholders with a stake of just under 1% as of Dec. 31. It was one of the only active managers with such a large position before exiting, the newspaper said.

“We didn’t see an existential risk but they were caught up in the sentiment around banks,” Mark Barker, head of international at the investment firm, told the FT. “With all the inflows to money-market funds Charles Schwab is losing deposits revenue,” he said.

Read more on GQG’s strategy and performance.

Schwab — which runs brokerage, banking and asset-management businesses — is among financial firms being swept up in the worst US banking crisis since 2008. Unrealized losses on the Westlake, Texas-based firm’s balance sheet, loaded with long-dated bonds, ballooned to more than $29 billion last year. At the same time, higher interest rates are encouraging customers to move their cash out of certain accounts that underpin Schwab’s business and bolster its bottom line.

Schwab shares have lost nearly a third of their value since March 8, with some Wall Street analysts expecting earnings to suffer. The brokerage reports first-quarter results April 17.

Chief Executive Officer Walt Bettinger and the brokerage’s founder and namesake, billionaire Charles Schwab, have said the firm is healthy and is prepared to withstand the broader turmoil. Schwab declined to comment to the FT, according to the report.

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