- By Annabelle Liang
- business reporter
May 26, 2023 03:21 BST
Updated 2 hours ago
Image source: Getty Images
Wall Street giant JP Morgan Chase is cutting jobs at failed US lender First Republic Bank after buying the company this month.
Around 1,000 jobs, or 15% of the First Republic’s workforce, will be eliminated, according to the BBC.
Also this week First Citizens, which bought the US unit of another troubled lender, announced job cuts.
Earlier in the year, problems at US regional banks sparked fears that the crisis was spreading.
JP Morgan confirmed it was cutting jobs occupied by employees at the San Francisco-based bank, but did not provide figures on the job losses.
Affected employees will receive 60 days of wages and benefits, as well as a package that includes a lump sum payment and other benefits.
JP Morgan also said it helps them find new roles inside or outside the company.
“Since our acquisition of First Republic on May 1, we have been transparent with our employees and have kept our promise to notify them of their employment status within 30 days,” a JP Morgan spokesman said in a statement.
“We recognize they have been under stress and uncertainty since March and hope today brings clarity and closure,” the spokesperson added.
First Republic, known for its large home loan business and portfolio of affluent customers, was the 14th largest lender in the US at the end of last year. It was worth more than $20 billion (£16.2 billion) at the start of April.
However, the company came under pressure after the collapse of several US lenders, including the tech-focused Silicon Valley Bank (SVB), sparked concerns about the state of the banking system.
Later in April, First Republic announced that the company lost about $100 billion in deposits because customers wanted to withdraw their money.
Earlier this month, JPMorgan announced it would pay $10.6 billion to acquire First Republic in a regulator-brokered deal.
There were also concerns in the broader market about the value of bonds held by banks, as rising interest rates caused those bonds to lose value.
The failure of the First Republic is the second largest in US history. Earlier this month, the bank’s 84 branches in eight states reopened as branches of JP Morgan Chase Bank after regulators took control and sold them to the Wall Street Institute.
Meanwhile, SVB’s US operations have been taken over by First Citizens, while its UK operations have been bought out by London-based banking giant HSBC.
According to the BBC, First Citizens also plans to cut around 500 jobs from former SVB employees.
In an email seen by the BBC this week, Frank Holding, chief executive of First Citizens, highlighted the problems SVB was facing earlier in the year and said the cuts would cover: “Vote SVB -Turn off corporate functions and refrain from employing staff in customer-facing positions.”