Hundreds of jobs are expected to be eliminated as part of a buyout of Town and Country-based Scottrade Financial Services. Rival discount brokerage TD Ameritrade is purchasing Scottrade in a two-stage deal announced today.
Scottrade has 1,800 workers in the St. Louis area. A spokesperson says employee decisions will be made during the integration, and confirms a statement from TD Ameritrade CEO Tim Hockey that 500-to-1,000 jobs would be in the St. Louis area following the sale. The current plan is to keep a call center and some support services in place there.
TD Bank Group will buy Scottrade Bank from Scottrade Financial Services for $1.3 billion and fold it into TD Bank. Then, TD Ameritrade will buy Scottrade Financial Services for $4 billion.
The move comes as discount brokerages have fallen out of favor with small investors, who are increasingly placing their money in index funds.
In a statement, Scottrade CEO and founder Rodger Riney said it’s “become apparent that scale is more important than ever”. TD Ameritrade says the transaction adds significant scale to its retail business and more than quadruples the size of its branch network.
It’s possible Scottrade could’ve been up for sale because the 70 year-old Riney was diagnosed with cancer last year.
Combined, TD Ameritrade and Scottrade had $944 billion in total client assets and 600,000 average client trades per day for the year ended Sept. 30.
The deal combines the two biggest online brokerages and is expected to be complete by September 27 of next year.