First Republic: New owner JP Morgan cuts 1,000 jobs

  • by Annabelle Liang
  • Business reporter

image source, Getty Images

JPMorgan Chase, the Wall Street giant, decided to cut jobs at the American First Republic Bank, after buying the company this month.

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

Also this week, First Citizens, which bought a US unit of another struggling lender, announced job cuts.

Earlier this year, problems in US regional banks sparked fears of a more widespread crisis.

JPMorgan confirmed it would reduce the roles workers had at the San Francisco-based bank, but did not put a figure for job losses.

Affected employees will receive salary and benefits for 60 days, along with a package that includes one payment and other benefits.

JP Morgan also said it was helping them find new jobs within or outside the company.

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

“We are aware that they have been under stress and uncertainty since March and we hope that today will bring clarity and conclusion,” the spokesperson added.

First Republic, best known for its great home loan business and settling down wealthy clients, was the 14th largest lender in the United States at the end of last year. It was worth more than $20bn (£16.2bn) at the start of April.

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

Later in April, First Republic said it had lost about $100 billion in deposits as customers moved to withdraw their money.

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

In the broader market, there have also been concerns about the value of bonds held by banks, as rising interest rates have made these bonds less valuable.

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

Meanwhile, SVB’s US operations have been taken over by First Citizens, with its UK business being bought out by London-based banking giant HSBC.

First Citizens also plans to eliminate about 500 positions held by former SVB workers, the BBC understands.

In an email seen by the BBC this week, Frank Holding, CEO of First Citizens, highlighted problems SVB faced earlier this year and said the cuts would affect: “Select SVB functions and do not include any employees.” in customer-facing positions.”

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