Schwab scoops up rival for $26B

NEW YORK >> Charles Schwab is buying rival TD Ameritrade in a $26 billion stock swap, a blockbuster agreement brought about by massive disruption in the online brokerage industry.

Bowing to competitive pressure, brokerages have made it free for customers to trade U.S. stocks online. A combination of two of the biggest players in the industry would allow Schwab to save billions of dollars and make up for revenue lost from no longer charging investors such commissions.

The tie-up creates a company so big, however, that it may draw scrutiny from antitrust regulators. The combined company would have more than $5 trillion in client assets under management.

“With this transaction, we will capitalize on the unique opportunity to build a firm with the soul of a challenger and the resources of a large financial services institution that will be uniquely positioned to serve the investment, trading and wealth management needs of investors across every phase of their financial journeys,” Schwab CEO Walt Bettinger said Monday in a prepared statement.

The transaction would give Schwab an additional 12 million client accounts, $1.3 trillion in client assets and approximately $5 billion in annual revenue. The combined company is expected to control 24 million client accounts.

By itself, Schwab controls roughly half the market for holding money managed by and providing other services to registered investment advisers, according to estimates by Kyle Voigt, an analyst with Keefe, Bruyette & Woods. TD Ameritrade may control about 15% to 20%,