First Citizens, the new owner of Silicon Valley Bank’s (SVB) US operations, is laying off around 500 employees. The cuts will affect select SVB corporate functions and do not include any personnel in client-facing positions. The team in India that supports SVB is not impacted by the changes.
The layoffs come two months after First Citizens bought SVB’s business after the bank’s collapse. SVB’s failure, along with two other US banks, triggered fears of a more widespread banking crisis.
In an email to employees, First Citizens CEO Frank Holding highlighted the problems faced by SVB earlier this year. He said the cuts were necessary to “right-size” the company and “remain competitive.”
The BBC understands that the job cuts amount to around 3% of SVB’s total workforce.
SVB’s business in the UK was bought in March by London-headquartered banking giant HSBC for a nominal £1 ($1.25).
The collapse of SVB was followed by the failure of another US lender, Signature Bank. In early May, JP Morgan Chase took over First Republic, which had also been under pressure.
Meanwhile in Europe, Swiss officials brokered a rescue deal for troubled banking giant Credit Suisse by its rival UBS.
The layoffs at SVB are a sign of the challenges facing the banking industry. Rising interest rates and mounting withdrawals by customers have put pressure on banks’ profits.
It remains to be seen how First Citizens will fare in the long run. The bank has a strong track record, but it will need to be nimble in order to adapt to the changing financial landscape.