Schwab to sell its Capital Markets for $265 million

Struggling to get back to basics, Charles Schwab Corp. on Tuesday said it is selling its institutional investment and research division, Schwab SoundView Capital Markets, for $265 million.

"There is not enough synergy between (SoundView) and our core businesses to justify our continued investment in the capital markets arena," Chief Executive Officer and Chairman Charles Schwab said in a statement, reports San Francisco Chronicle.

According to the Motley Fool, the price tag comes to $265 million in cash. In January, Charles Schwab Corp. purchased Soundview for $321 million. That means Charles Schwab Corp. will take a noncash charge for the third quarter of $70 million to $80 million. The company also will take a $75 million to $85 million charge to junk its institutional research segment.

UBS said it would integrate the business, which comprises equities trading and sales and Schwab’s Nasdaq trading system, into its investment bank.

The unit matches buyers and sellers in more than 11,000 stocks and handles more than 200 million shares a day of trading volume.

The deal is the latest in a string of pinpoint purchases that has seen UBS strengthen its core activities in investment banking and wealth management. But analysts have said the deal is too small to transform UBS in any significant way.

John Costas, chief executive of UBS Investment Bank, said: "This transaction is consistent with our organic growth plan in combination with targeted acquisitions."

The sale comes less than eight months after Schwab - the largest US discount brokerage - bought the business, now known as Schwab SoundView Capital Markets, for around Ј179m, writes Scotsman.

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