Report: 15% of First Republic Workforce Being Cut After Acquisition

JPMorgan Chase is reportedly cutting about 15% of the workforce from First Republic Bank.

The move follows JPMorgan Chase’s May 1 acquisition of the bank that had been struggling for weeks after being downgraded by ratings agencies during March’s banking crisis.

JPMorgan Chase notified 1,000 First Republic Bank employees Thursday (May 25) that they won’t be offered jobs after the takeover, Bloomberg reported Thursday.

The company also told the other 85% of the acquired bank’s employees that they will be offered either full-time roles or transitional ones that will last for three to 12 months, depending on the position, according to the report.

JPMorgan Chase did not immediately reply to PYMNTS’ request for comment.

In a statement supplied to Bloomberg, the bank said: “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. We recognize that they have been under stress and uncertainty since March and hope that today will bring clarity and closure.”

JPMorgan Chase’s May 1 acquisition came after the Federal Deposit Insurance Corp. (FDIC) took over First Republic Bank amid the second-biggest banking collapse since 2008.

About six weeks earlier, on March 16, JPMorgan Chase and 10 other large U.S. Banks made uninsured deposits totaling $30 billion into First Republic in an effort to ensure it had the liquidity it needed.

First Republic had been struggling because, after the closures of Silvergate Capital, Silicon Valley Bank and Signature Bank in March, regional banks were slipping and there were continued waves of worry over bank runs.

On April 24, about a week before the acquisition, First Republic said it expected to reduce its workforce by as much as 25% in the second quarter as it worked to strengthen its business, restructure its balance sheet and reduce expenses after experiencing “unprecedented deposit outflows.”

Most of the employees who were told Thursday that they would not get an offer from JPMorgan Chase were among those who would have been laid off by First Republic, but hadn’t been told before that bank was acquired, according to the Bloomberg report.