JPMorgan has laid off 1,000 First Republic Bank employees three weeks after buying out the collapsed firm.
Terminated bank employees were notified on Thursday during a four-minute scripted phone call that they were being laid off with a severance package that included additional pay and benefits for 60 days, a source told Reuters.
The other 85 percent of the remaining 7,000 of First Republic Bank employees were offered temporary full-time and transitional roles for up to 12 months.
First Republic Bank was the third to fail in March following the collapse of Silicon Valley Bank and Signature Bank, as investors and depositors became worried the bank wouldn’t survive as an independent entity.
The bank was seen as likely to fall due to its high amount of uninsured deposits and exposure to low interest rate loans, according to AP.
About 1,000 First Republic employees were terminated on Thursday by takeover bank JPMorgan. The other 85 percent of the remaining 7,000 employees were offered temporary positions up to 12 months
First Republic Bank collapsed in March following the fall of Silicon Valley Bank and Signature Bank
The layoffs were the latest steps in JPMorgan’s takeover, a spokesperson claimed employees weren’t blindsided.
First Republic said last month its deposits had slumped by more than $100 billion in the first quarter. The bank’s CEO Michael J. Roffler is seen above
‘Since our acquisition of First Republic on May 1, we’ve been transparent with their employees and kept our promise to update them on their employment status within 30 days,’ a JPMorgan spokesperson told Bloomberg.
‘We recognize that they have been under stress and uncertainty since March and hope that today will bring clarity and closure.’
The terminations came a month after First Republic Bank announced they would cut 25 percent of jobs to assist the failing firm.
First Republic became the largest US bank to fail since 2008 after it was seized by regulators and sold to JPMorgan in early May.
Despite receiving a $30 billion deposit lifeline from 11 major banks, shareholders continued to sell First Republic stock.
Depositors pulled $100 billion from their accounts from the lender in the first quarter, pushing it toward its collapse weeks later.
A deal for First Republic comes less than two months after Silicon Valley Bank and Signature Bank both failed
World markets have periodically been shaken by worries over turmoil in the banking industry since Silicon Valley Bank’s collapse.
But before Silicon Valley Bank failed, First Republic had a banking franchise that was the envy of most of the industry.
Its clients – mostly the rich and powerful – rarely defaulted on their loans.
The 72-branch bank has made much of its money providing low-cost loans to the rich, which reportedly included Meta Platforms CEO Mark Zuckerberg.