First Republic Bank intends to reduce its workforce by 25% in the second quarter of this year.
Source: Pixabay.com
Last Monday, April 24, this financial institution published a press release, which is the first profit report since the bankruptcy and receiving support from 11 banks in the form of deposits for $ 30 billion. This press release states that First Republic is currently making efforts to strengthen the business, is restructuring the balance sheet, and is developing a cost reduction strategy.
In a joint statement, the founder and executive chairman of the bank, Jim Herbert, and CEO and president Mike Roffler said that the financial institution is taking steps to strengthen the business after stabilizing the deposit base, and improving credit quality and capital position. They also noted their commitment to serving communities and expressed gratitude to customers and colleagues for their constant support.
To restructure its balance sheet, First Republic intends to increase insured deposits, reduce borrowing from the Federal Reserve Bank and reduce loan balances.
As part of the implementation of the plan aimed at reducing the volume of expenses, the financial institution will reduce remuneration to managers and dismiss from 20% to 25% of employees. In the context of this plan, the bank will also reduce the area of corporate offices.
About a month and a half ago, 11 major US financial institutions placed uninsured deposits totaling $30 billion in First Republic. The deposits were made after reports that the bank had downgraded Fitch Ratings and S&P Global Ratings and was considering a sale and options to increase its liquidity.
First Republic’s total deposits as of March 31 amounted to $104.5 billion, including $30 billion of deposits received from major banks. As of December 31, 2022, this amount was $176.4 billion.
First Republic CFO Neil Holland says that after the March collapse of Silicon Valley Bank and Signature Bank, the financial institution faced an unprecedented outflow of deposits. He also said that the bank used high-quality portfolios of loans and securities to provide additional liquidity.
