Earlier in May, JP Morgan acquired the majority stake in First Republic Bank, and now it seems that the troubled bank’s new owner will reduce its workforce by 15 percent.
Earlier this year, problems at regional American banks raised concerns about a more widespread banking crisis, as reported by the BBC.
Financial firm and commercial bank JP Morgan purchased struggling First Republic Bank on May 1st and announced that they would be reducing the number of employees at the bank, but did not provide a specific figure.
According to the BBC, JP Morgan will now reduce the number of employees at First Republic by around 1,000, which accounts for 15 percent of the workforce.
Employees to Receive Severance Packages and 60 Days’ Pay
Employees who lose their jobs will receive pay and benefits for 60 days, as well as a severance package including a lump sum and other benefits.
JP Morgan stated that they will also assist the laid-off employees in finding new jobs, either within or outside the company. “Since our acquisition of First Republic on May 1st, we have been transparent with their employees and have kept our promise to update them on their employment status within 30 days,” said a spokesperson for JP Morgan in a statement, as reported by the BBC.
Lost $100 Billion
First Republic was known for its significant mortgage business and wealthy clients, and it was the 14th largest bank in the United States at the end of last year, valued at over $20 billion.
However, the bank was negatively impacted when several American banks, including technology-focused Silicon Valley Bank, collapsed, raising concerns about the state of the banking system.
In April, First Republic Bank announced losses of approximately $100 billion in deposits as anxious customers withdrew their funds.
More Bank Employees Facing Layoffs
First Republic’s collapse is the second-largest bank collapse in U.S. history. In early May, 84 of the bank’s branches in eight states reopened as JP Morgan took control of the bank.
Meanwhile, First Citizens took over Silicon Valley Bank’s operations in the U.S., and its operations in the UK were sold to HSBC.
First Citizens also plans to downsize its workforce, with approximately 500 former Silicon Valley Bank employees affected, according to the BBC.