- Billionaire Charles Schwab’s net worth has plunged about $3 billion since March 8.
- Shares of Charles Schwab Corp fell sharply amid the collapse of Silicon Valley Bank.
- Investors are worried as Charles Schwab Corp is sitting on a significant amount of unrealized losses on its bond assets.
Billionaire Charles Schwab’s fortune has taken a massive beating after shares of the eponymous company he founded plunged amid the banking crisis.
Shares of Charles Schwab Corp, a savings and loan holding company, closed 11.6% lower at $51.91 apiece on Monday, bringing its market value lower by nearly 38% so far this year.
As founder Schwab has much of his fortune tied to a 6% stake in the company, the billionaire has seen $2.9 billion wiped off from his fortune since March 8, when the Silicon Valley Bank, or SVB, situation started unraveling, per Bloomberg.
The 85-year-old tycoon, who is the world’s 183rd richest person, is now worth nearly $10 billion after 26% of his wealth was erased so far this year, according to the Bloomberg Billionaires Index.
Schwab’s losses as of March 14 mean his wealth has dropped the most among US billionaires so far this year. He is leading losses only behind Indian billionaires Gautam Adani and Mukesh Ambani, who have suffered from a bout of losses following a US short seller’s attack on Adani’s business empire.
Investors are worried about banks’ massive unrealized losses
Ever since SVB imploded, investors are growing more and more worried about the massive unrealized losses banks are sitting on in their bond portfolios.
Charles Schwab Corp — while best known for its discount brokerage business — also provides banking and loan services.
The bank posted a combined nearly $28 billion in unrealized losses as of December 31, across its held-to-maturity and available-for-sale bond portfolios, per its annual 10-K filing, which is causing jitters — that’s because investors are concerned that Charles Schwab Corp could go the way of SVB if it’s forced to sell its bonds at a loss.
Charles Schwab Corp even sought to soothe investor jitters in a statement on Monday, saying it has enough liquidity to weather any volatility.
Peter Crawford, the company’s CEO, said in the statement that the company has access to “significant liquidity,” including about $100 billion of cash flow, and over $300 billion of incremental capacity with the Federal Home Loan Bank and other short-term facilities.
“Given our significant access to other sources of liquidity there is very little chance that we’d need to sell them prior to maturity,” Crawford added.
More than 80% of its bank deposits also fall within Federal Deposit Insurance Corporation insurance limits — which is $250,000 per depositor, per insured bank, for each account ownership category — he added.
The firm added in the Monday statement it was holding $7.38 trillion of client assets and 1.7 million banking accounts at the end of February.
Charles Schwab’s shares rebounded 3.4% in after-hours trade on Monday.
Charles Schwab Corp did not immediately respond to Insider’s request for comment sent outside regular business hours.