After First Citizen's axe on SVB, JP Morgan lays off 1,000 First Republic employees
2 min read 26 May 2023, 04:20 PM ISTFirst Citizen has laid off 500 employees of the failed Silicon valley bank, a day after which JP Morgan announced job cut for 1,000 employees of First Republic bank
PremiumIn March, 2022, United States saw three bank failures- Silicon Valley bank and Signature bank within the same weekend, followed by First Republic Bank. The simultaneous bank collapse in US triggered panic among clients.
First Republic’s fate was set when the bank revealed that it lost $100 billion in deposits after SVB’s collapse led to panic among wealthy clients. Its stock plummeted 75% as a consequence.
First Republic Bank became the second large regional bank with assets over $200 billion to fail in just a few weeks. Like Silicon Valley Bank, which was seized by the US government on 10 March, First Republic catered to a wealthy clientele, which helped it grow deposits rapidly but may have also contributed to its undoing.
In order to bring the failed US banks afloat, as part of damage control, budget fix for the banks, has led to lay-offs for Silicon valley Bank (SVB) and First Republic Bank employees, by their buyers- First Citizens Bank and JP Morgan.
Local news papers have noted that the huge layoffs have angered, upset and numbed the former employees. “The reality of it is the leadership can now go back to Wall Street and say we bought this failed bank and now we’re doing something about it." said one director-level SVB employee to San Francisco Standard.
To recollect, First Republic failed when depositors withdrew more than $100 billion ( ₹8.17 lakh crore) in the six weeks following SVB’s collapse, and on 1 May. This was the same kind of fate SVB faced leading to its collapse.
Silicon Valley Bank was caught unprepared when the Federal Reserve hiked interest rates earlier this year, a move that reduced the value of its reserves of Treasury bonds. It was walloped again when the tech clientele it had courted rushed to withdraw their funds.
Silicon Valley Bank (SVB) was shut down in March 2023 by the California Department of Financial Protection and Innovation. Based in Santa Clara, California, the bank was shut down after its investments greatly decreased in value and its depositors withdrew large amounts of money, among other factors.
JP Morgan layoffs 1,000 First Republic employees
JPMorgan Chase & Co notified nearly 1,000 First Republic Bank employees that they will no longer have a job as it integrates the failed lender it bought earlier this month, according to Reuters report.
JPMorgan, the largest US bank, has offered employment to about 85% of First Republic's almost 7,000 employees for transitional or full-time roles. Temporary positions would last an estimated three months to a year, depending on the job, the person said.
Employees who have not been offered roles will receive pay and benefits for 60 days and be offered packages that include additional lump sum payments and continuing benefits coverage, the bank said.
First Citizens Bank layoffs 500 SVB employees
First Citizens Bank that acquired the remnants of Silicon Valley Bank (SVB) after it failed amid a March bank run announced layoffs Wednesday.
First Citizens Bank of Raleigh, North Carolina, said it was cutting about 500 jobs, or about 3% of its workforce. The workers will continue to be paid through June 9.
CEO Frank Holding said the move would only affect “select" corporate Silicon Valley Bank positions, adding that neither employees in customer-facing jobs, nor members of a team based in India, would be impacted.
(With inputs from agencies)
