New SVB owner cut 500 jobs

Following the acquisition of Silicon Valley Bank’s (SVB) US operations by First Citizens, it has been revealed that approximately 500 positions previously held by SVB employees will be eliminated, according to sources. First Citizens purchased SVB after the bank’s collapse, which, along with the failures of two other US banks, raised concerns about a potential banking crisis, prompting regulatory intervention. In March, London-based banking behemoth HSBC acquired SVB’s UK business for a nominal fee of £1 ($1.25).

In an email obtained by the BBC, Frank Holding, CEO of First Citizens, acknowledged SVB’s challenges earlier this year and stated that the job cuts would primarily impact select corporate functions, sparing client-facing roles. He also mentioned that the changes would not affect the team in India responsible for supporting SVB operations. It is estimated that the job cuts represent roughly 3% of the total workforce.

First Citizens, headquartered in Raleigh, North Carolina, identifies itself as America’s largest family-controlled bank and has been active in acquiring troubled banks in recent years. As part of the deal, all 17 former SVB branches now operate under the First Citizens brand. In the UK, HSBC’s acquisition of SVB’s British operations was facilitated by the government and the Bank of England. HSBC announced earlier this month that the takeover contributed to a $1.5 billion boost in its profits.

Former SVB CEO Greg Becker recently testified before Congress and apologized for the bank’s collapse, citing rising interest rates and substantial customer withdrawals as key factors. While central banks worldwide have been raising interest rates to curb inflation, these rate hikes have adversely impacted the value of banks’ investments, including SVB, leading to their failures. Regulators, however, have attributed SVB’s downfall to its leadership’s failure to manage interest rate risks and diversify its business.

SVB’s collapse was followed by the failure of another US bank, Signature Bank, and in early May, JP Morgan Chase took over First Republic, which was also under significant pressure. In Europe, Swiss officials brokered a rescue deal between troubled banking giant Credit Suisse and its rival UBS, while Swiss prosecutors initiated investigations into the matter.