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HomeFinanceThe aftermath of First Republic Acquisition: JPMorgan Axes 15% of Staff

The aftermath of First Republic Acquisition: JPMorgan Axes 15% of Staff

Following the acquisition of First Republic Bank earlier this month, banking behemoth JPMorgan has announced that around 1,000 of the newly acquired employees are not part of its long-term plans.

With a pre-acquisition headcount of approximately 7,000 at First Republic, this means that 85% of the workforce has been secured either full-time or transitional roles within JPMorgan.

In an official statement, a JPMorgan spokesperson reassured that the “vast majority” of the First Republic team would find employment within the newly combined entity. As for the others, they would receive a 60-day period of pay and benefits, along with an additional lump-sum payment and continued benefits coverage.

Moreover, JPMorgan is putting measures in place to assist displaced employees in finding new roles, either within its expansive network or externally. This comes as a relief considering the bank currently boasts thousands of job openings across its divisions. However, specifics regarding which First Republic divisions were most affected by these layoffs have been withheld.

JPMorgan’s acquisition of First Republic happened after the FDIC took control on May 1. The buyout concluded weeks of suspense surrounding the future of America’s 14th-largest bank, which was under immense pressure due to deposit withdrawals and uncertainty about its longevity.

This acquisition seems advantageous for JPMorgan, as First Republic’s portfolio includes consumer bank branches in affluent cities like Los Angeles and New York. Plus, the San Francisco-based bank has a solid reputation for serving the clientele JPMorgan is keen on – startups and their founders.

Already, the First Republic purchase appears to be yielding results. JPMorgan shared with investors that it anticipates its net interest income (the spread between what a bank earns on loans and what it pays on deposits) to inflate by $3 billion this year, attributing this growth to the recent First Republic deal.

However, some consolidation is on the horizon, with the bank revealing plans to shut down certain First Republic branches, particularly those in close proximity to each other or existing JPMorgan branches.

The JPMorgan statement expressed the bank’s empathy towards the employees’ stress and uncertainty since March, with hopes that the announcement would bring much-needed clarity and closure.