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. Last Updated: 07/27/2016

Top Jobs at Schwab Split for Ethics' Sake

NEW YORK -- Top U.S. discount brokerage Charles Schwab Corp. said Friday it will split the jobs of chairman and chief executive in a bid to guard against concerns over its corporate governance structure.

The San Francisco-based company, which has $765 billion in assets, named president and co-chief executive David Pottruck as sole CEO. Charles "Chuck" Schwab will relinquish the co-CEO title and remain as chairman.

"The likelihood of there being any unethical dealings that may have prompted this is de minimis [negligible]," said Ken Worthington, an analyst at CIBC World Markets.

"I think the decision was voluntary, so I would be surprised if there was any pressure to leave. And if there was pressure for performance reasons, there would likely have been a change of both co-CEOs. This is not a big deal."

Schwab, a 65-year-old Sacramento native, has fashioned his company as an antidote to Wall Street firms seen as rife with conflicts of interest. He said he will remain active with the company. The changes take effect May 9.

"As many experts have suggested, from regulators to Congress to independent blue-ribbon panels, it is important in today's environment that the positions of CEO and chairman be distinct and that the chairman play a central role," Schwab said in a statement.

Like several other companies in Standard & Poor's 500, Schwab rates a 7 on S&P's corporate governance ratings scorecard, which is based on a scale of 1 to 10, with 10 being the highest. The company also outperformed 87.3 percent of the S&P 500 according to the corporate governance index devised by proxy firm Institutional Shareholder Services, said ISS vice president Patrick McGurn.

Schwab, who founded the brokerage in 1971, sold it to Bank of America Corp. in 1983, then led a management buyback in 1987. He took it public later that year.

In the last few years, the company has been hurt by steep market declines and an industrywide slump in customer stock trading. The brokerage reported a fourth-quarter net loss of $79 million on Jan. 21 and said revenue for the period dropped 6 percent to $996 million.

"Pottruck has been running the place for years, and Chuck Schwab owns all the stock, so fundamentally, I don't see any change at all, other than this is a wonderful honorarium for Pottruck," said Brad Hintz, an analyst at Bernstein Investment Research and Management. "Schwab is one of the leaders in the industry regarding corporate governance, and this move reflects that."

British bank Barclays agreed to buy the European arm of U.S. stockbroker Charles Schwab on Friday, aiming to build its customer base during one of the longest bear markets since World War II.

Neither firm would give the cost of the deal, which will result in the closure later this year of Schwab's operations in the cities of Birmingham and Milton Keynes in central England.

No job loss figures were given, but the combined company will be run out of existing Barclays centers in Glasgow, Scotland, and Peterborough in eastern England. Some Schwab staff will transfer to those sites.