Approximately 500 positions previously held by employees of Silicon Valley Bank (SVB) are being cut by First Citizens, the new owner of SVB’s US operations, according to sources familiar with the matter. First Citizens acquired SVB’s business two months ago after SVB’s collapse, which, along with the failure of two other US banks, sparked concerns of a broader banking crisis and prompted intervention by authorities.
HSBC, a London-based banking giant, purchased SVB’s UK business in March for a nominal fee of £1 ($1.25) as part of a deal orchestrated by the government and the Bank of England. In an email seen by the BBC, First Citizens’ CEO, Frank Holding, acknowledged the challenges faced by SVB earlier this year and indicated that the job cuts would impact “select SVB corporate functions” rather than client-facing positions. He also clarified that the changes would not affect the team in India responsible for supporting SVB.
The reduction in workforce represents approximately 3% of the company’s total employees. The news was initially reported by Axios, a US-based news website. First Citizens, based in Raleigh, North Carolina, touts itself as the largest family-controlled bank in America and has been an active purchaser of troubled banks in recent years. As part of the acquisition, all 17 former SVB branches were rebranded under the First Citizens name.
In contrast, HSBC reported a $1.5 billion boost in profits from its takeover of SVB’s British operations earlier this month. Greg Becker, SVB’s former CEO, recently testified before Congress, expressing remorse and attributing rising interest rates and significant customer withdrawals as key factors leading to the bank’s collapse. However, regulators placed blame on SVB’s leadership for failing to manage interest rate risks and diversify the bank’s business.
The collapse of SVB was followed by the failure of Signature Bank, another US lender, and in early May, JP Morgan Chase took over First Republic, which had also been under pressure. Meanwhile, Swiss officials brokered a rescue deal for troubled banking giant Credit Suisse through its rival UBS, an investigation of which is currently underway by Swiss prosecutors.
