Silicon Valley Bank to cut 3% of its workforce, target ‘select’ corporate positions
Silicon Valley Bank's collapse can be attributed to its unpreparedness for the interest rate hike initiated by the Federal Reserve earlier in 2023.
PremiumSilicon Valley Bank, once a prominent player in the banking industry, has faced a significant setback as it succumbed to financial difficulties and subsequently went under. Following its collapse earlier in 2023, the remnants of the bank were acquired by First Citizens Bank, based in Raleigh, North Carolina. However, the acquiring bank has now announced layoffs, with approximately 500 positions, or 3% of its workforce, set to be eliminated.
The CEO of First Citizens Bank, Frank Holding, clarified that these job cuts would primarily affect ‘select’ corporate roles within Silicon Valley Bank. Notably, customer-facing employees and the team based in India would be spared from the layoffs. Despite the significant impact on employees, the move is seen as a strategic measure to restructure and streamline operations.
Also Read: Ex-CEO Greg Becker of failed Silicon Valley Bank defends pay, refuses to return $10 million
Silicon Valley Bank's downfall was attributed to its lack of preparedness when the Federal Reserve raised interest rates earlier in 2023. This development devalued the bank's reserves of Treasury bonds, exacerbating its financial woes.
Furthermore, a mass withdrawal of funds by its tech-focused clientele further compounded the bank's difficulties. With a customer base primarily comprising technology workers and venture capital-backed companies, including some of the industry's most recognizable brands, Silicon Valley Bank's failure sent shockwaves through the financial system.
In a subsequent turn of events, a lawsuit filed by First Citizens Bank alleges that a group of top bankers from Silicon Valley Bank orchestrated a mass resignation. The lawsuit claims that the bankers were subsequently hired by HSBC Holdings, suggesting a deliberate effort to poach a highly-profitable business segment that First Citizens had acquired through its purchase of Silicon Valley Bank.
First Citizens Bank, seeking to expand its reach and leverage Silicon Valley Bank's established relationships in the technology and life sciences sectors, had acquired the remaining assets of the failed bank.
However, the alleged scheme by HSBC and a former senior Silicon Valley Bank banker to seize control of the lucrative business prompted First Citizens Bank to file a lawsuit seeking over $1 billion in damages.
(With agency inputs)
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