Badly battered by shrinking interest revenues, The Charles Schwab Corporation will fire 600 of its staff in a bid to ensure its survival amid an unwanted environment of low interest rates. The firings come ahead of a forthcoming interest hike next week that will place even more pressure on the bank and brokerage firm to further cut costs.

Those being laid-off represent three percent of the bank’s workforce. Employees to be fired come from all staffing grades, as well as organizations and locations across Schwab.

Schwab said the layoffs are part of an effort to streamline mounting expenses as net interest revenue remains under increasing pressure from low interest rates.

Net interest revenue remains a large income source for Schwab, and this source is steadily dwindling. Its second quarter earnings report saw Schwab’s net interest revenue drop 4 percent from the first quarter.

In July, Schwab warned that if the rate cuts by the U.S. Federal Reserve continued, it expects further declines for the rest of the year. The company’s difficulties are also mirrored in its stock that has badly underperformed so far this year. Schwab’s stock is up just 1.2 percent in 2019 compared to the 16.5 percent gain for the SPDR S&P Bank ETF.

Like Schwab, other big banks are getting badly burned by low interest rates. Citigroup and Wells Fargo last week both admitted they also expect lower interest income due to the economic growth slowdown, as well Fed cuts. There might be two more Fed cuts by 2020.

Analysts said the mass layoff is an attempt by Schwab to buy time.

“While it is never easy to say goodbye to valued colleagues, these actions are a prudent step to ensure we manage our expense growth while continuing to invest in initiatives that allow us to achieve greater scale and efficiency -- like platform improvements and digital experiences,” said the company in justifying the firings that came ahead of the holiday season.

Schwab also said it initiated a process earlier this year to review its expense base “to ensure we remain well-positioned to serve clients while navigating an increasingly challenging economic environment.” It said that as part of this process, it decided to eliminate 600 jobs across the firm.

Charles Schwab Charles Schwab's data is closely watched as an indicator of retail investor sentiment. Photo: Reuters