First Republic: 1,000 jobs cut by new owner JP Morgan

  • By Annabelle Liang
  • Business reporter

image source, Getty Images

Wall Street giant JP Morgan Chase is cutting jobs at failed US lender First Republic Bank after acquiring the company this month.

About 1,000 positions, or 15%, of First Republic’s workforce will be cut, the BBC understands.

Also this week, First Citizens, which bought the US arm of another troubled lender, announced job cuts.

Earlier this year, problems at US regional banks sparked fears of a bigger crisis.

JP Morgan confirmed it was cutting jobs filled by employees at the San Francisco-based bank, but did not provide a figure on job losses.

Affected employees will receive wages and benefits for 60 days, along with a lump sum package and other benefits.

JP Morgan also said it helped them find new positions inside or outside the company.

“Since our acquisition of First Republic on May 1, we have been transparent with their employees and kept our promise to update them on their employment status within 30 days,” a JP Morgan spokesperson said in a statement.

“We recognize that they have been under stress and uncertainty since March and hope that today will bring clarity and closure,” the spokesperson added.

Known for its large home loan business and a stable of high net worth clients, First Republic was the 14th largest lender in the US at the end of last year. It was worth more than $20bn (£16.2bn) at the beginning of April.

However, it came under pressure after the collapse of several lenders in the US, including the tech-focused Silicon Valley Bank (SVB), sparking fears about the state of the banking system.

Later in April, First Republic said it lost about $100 billion in deposits as customers withdrew their funds.

Earlier this month, JPMorgan said it would pay $10.6 billion to acquire First Republic in a deal brokered by regulators.

In the wider market, there were also concerns about the value of bonds held by banks, as rising interest rates devalued those bonds.

The First Republic failure is the second largest in US history. Earlier this month, the bank’s 84 offices in eight states reopened as branches of JP Morgan Chase Bank after regulators seized control and sold it to the Wall Street institution.

Meanwhile, SVB’s US operations were acquired by First Citizens as the UK operations were bought by London-based banking giant HSBC.

First Citizens also plans to cut around 500 positions held by former SVB employees, the BBC understands.

In an email received by the BBC this week, Frank Holding, CEO of First Citizens, highlighted the issues faced by SVB earlier this year, saying the cuts will affect: “select SVB corporate functions and don’t hire staff into customer-facing features.”

Leave a comment