JPMorgan JPM and First Citizens BancShares, Inc. FCNCA, which took over collapsed First Republic Bank and Silicon Valley Bank, respectively, have laid off workers in the failed entities. The job cuts at First Republic were first reported by Bloomberg, while layoffs of Silicon Valley Bank employees were reported by Axios.
The layoffs will affect about 15% of First Republic workers, while approximately 500 Silicon Valley Bank staff has been impacted. These job cuts are part of the integration process.
JPMorgan, which acquired First Republic on May 1, had hinted at layoffs on the day of the deal announcement. Jeremy Barnum, chief financial officer, had said, “In connection with any job losses, we would emphasize that in the normal course, JPMorgan hires tens of thousands of people in the United States each and every year, which means that there will be many opportunities for career redeployment.”
JPM has offered temporary or full-time roles to the 85% of First Republic employees. Notably, transitional positions will last three months to a year, depending on the type of job. In a statement, a JPMorgan spokesperson said, “We've been transparent with their employees and kept our promise to update them on their employment status within 30 days.”
Those who haven’t been offered any role will get pay and benefits for two months and be offered packages that would include additional lump sum payments and continuing benefits coverage.
Additionally, JPMorgan has informed that as it doesn’t provide personal lines of credit, it has no plans to offer them to former First Republic clients when they come up for renewal.
Now coming to job cuts at Silicon Valley Bank. Majority of the layoffs were in the commercial banking business. The affected positions are neither client facing, nor were India-based support staff.
Frank Holding Jr., FCNCA’s CEO, said, “Given the challenges faced by SVB in early 2023, it is increasingly clear that we must make decisions to right-size our scope and scale to remain competitive. As a result, we are taking difficult but necessary actions to ensure that our workforce and costs are appropriate for a bank our size.”
First Citizens BancShares acquired Silicon Valley Bank on Mar 27. Silicon Valley Bank had collapsed and was seized by the regulators following heavy deposit outflows at the bank. Its failure rattled the banking industry and led to the collapse of Signature Bank and First Republic Bank.
Signature Bank was sold to New York Community Bancorp, Inc. NYCB on Mar 20. NYCB, through its bank subsidiary, Flagstar Bank, acquired $38 billion in assets and assumed $36 billion of liabilities of Signature Bank while not buying any digital asset banking, crypto-related assets or the fund banking business.
Though NYCB hasn’t announced any plans to lay off employees, the current challenging operating environment might lead to the same going forward.
Over the past three months, shares of JPMorgan have lost 4.5%, while First Citizens BancShares stock has surged 71.1%.
Three-month Price Performance
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Currently, FCNCA sports a Zacks Rank #1 (Strong Buy) and JPM has a Zacks Rank of 3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
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