JPMorgan Makes 1,000 First Republic Bank Layoffs After Taking Over “in Distress” Purchase
Key takeaways
- JPMorgan is reducing First Republic’s total headcount by 1,000, or 15% of all jobs
- The bank took over First Republic at the start of May after it became the fourth bank to collapse in 2023
- JPMorgan shares were up slightly at the announcement
JPMorgan has confirmed how many First Republic employees are losing their jobs. It’s set to slash 1,000 roles from the beleaguered bank, which collapsed at the end of April after limping away from the March banking crisis. We’ve got all the details below and how the deal is working out for JPMorgan so far.
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What’s the latest at First Republic?
JPMorgan has now confirmed it’s offering roles to 85% of First Republic Staff but that the remaining 15% will be let go. The total job cuts come to 1,000. All of those affected will receive 60 days’ worth of pay and benefits, plus an additional severance package. It will also close some First Republic branches which are too close to existing JPMorgan ones.
Some staff have been offered temporary roles which will last either three, six or nine months as JPMorgan completes the transition. In a statement, JPMorgan said “We recognize that they have been under stress and uncertainty since March and hope that today will bring clarity and closure”.
First Republic Bank, which had been teetering on the edge since the March financial crisis, finally collapsed last month and was snapped up by megabank JPMorgan. At the time, the regional bank had around 7,000 employees.
JPMorgan beat out other rivals to take over First Republic, taking on $173 billion of First Republic’s loans, $30 billion of securities and $92 billion in deposits.
What was the market reaction?
JPMorgan stock rose slightly at the news, but it was otherwise embattled with the debt-ceiling saga. JPMorgan’s share price is up 1.35% in 2023.
When JPMorgan first announced it was buying up the troubled First Republic, its share price rose 2.9% as it was considered a good deal for the bank as First Republic’s buzzy start-ups and entrepreneurs client base is something JPMorgan wants to attract more of.
After a sensational Q1 earnings beat, JPMorgan has already indicated the First Republic takeover is paying off: its latest investors day revealed an anticipated $3 billion increase in net interest income this year thanks to the distress purchase.
The bottom line
It was inevitable that with JPMorgan taking over First Republic that some job losses would need to happen. It’s still less than what First Republic had originally seen to be a 25% workforce reduction, and in a silver lining for those affected, JPMorgan says it currently has 13,000 roles open. As layoffs go, it could have been much worse.
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