JPMorgan Chase, the American multinational services company headquartered in New York, is implementing workforce reductions as part of its routine business evaluations. Approximately 500 employees are being laid off as a result.
A spokesperson from the banking company confirmed that the initial reports about job cuts at the financial institution are accurate. The spokesperson stated that the layoffs primarily target the technology and operations divisions of the company. These job reductions are a result of the bank’s continuous efforts to improve its operations and adjust to changing market conditions.
JPMorgan’s layoffs coincide with the company’s announcement to inform around 1,000 employees at First Republic Bank that they will be laid off in the near future. Just a month ago, JPMorgan made a decision to acquire the assets and liabilities of First Republic Bank, a commercial bank based in San Francisco.
The takeover of First Republic Bank
First Republic Bank encountered financial problems and was unable to gather enough funds to pay back its depositors. As a result, the government took control of the bank’s operations and later decided to sell it. To acquire the bank, JPMorgan made a payment of $10.6 billion to the Federal Deposit Insurance Corporation (FDIC).
Additionally, JPMorgan returned $25 billion in funds that other banks had deposited with First Republic earlier, as part of an agreement with the US Department of Treasury. Furthermore, JPMorgan eliminated a $5 billion deposit it had previously made with the First Republic.
According to a JPMorgan spokesperson who spoke to CNN, the bank has provided an update to all First Republic employees regarding their future employment. The spokesperson mentioned that the majority, nearly 85%, have been offered either a transitional or full-time role. However, around 15%, which is approximately 1,000 employees, did not receive an offer for continued employment.
When JPMorgan took over the operations of First Republic Bank, there were no specific agreements made regarding the future employment of the employees from First Republic. This means that JPMorgan has the freedom to decide whether to lay off or retain those employees as they see fit.
Stock Market Performance of JPMorgan Chase
By implementing these layoffs, the institution aims to enhance its competitive advantage and strengthen its position as a leading player in the industry. While layoffs can raise concerns, presenting this action as a strategic decision rather than a necessity is likely to be well-received by Wall Street, thereby pleasing investors with the bank’s recent move.
Over the past week, the shares of JPMorgan have experienced a decline of 2.98%, amounting to a decrease of 4.2 points, with the current share price standing at 136.94. On Friday, the share price of JPMorgan increased by $1.27 (0.94%).
Another layoff in the banking sector
First Citizens BancShares Inc, the company that acquired the collapsed Silicon Valley Bank (SVB), has laid off 500 SVB employees. The layoffs did not impact employees in customer-facing roles or the support team based in India.
The CEO of First Citizens, Frank Holding, explained via email that the company needed to downsize to remain competitive. A director-level employee suggested that more layoffs might occur in the future. SVB, previously one of the top 20 American commercial banks with $209 billion in assets, faced a bank run that caused its collapse. Depositors’ concerns were addressed as the government ensured the safety of their deposits.