Sunday, December 3, 2023

First Republic announces layoffs after losing 40% of its deposits

The US bank First Republic, one of the hardest hit in the recent crisis, revealed on Monday that during the first quarter its deposits fell by more than 40%, but it assured that the situation is stabilized and that it will now take measures to straighten out its business, including a cut of between 20% and 25% of its workforce.

The entity Californian, which was dragged by the turbulence unleashed by the collapse of Silicon Valley Bank (SVB), presented its quarterly accountswhich shed light on the crisis he experienced and which led a dozen large banks to come to his rescue and inject $30 billion.

“With the closing from various banks in March, we experienced outflows of record deposits. We act quickly and use our portfolios of loans and high-quality securities to get additional liquidity”, explained in a statement the chief financial officer of First Republic Bank, Neal Holland.

As indicated, now the entity is working to restructure your balance sheet and reduce expenses and short-term loans.

The accounts of the entity show a huge outflow of deposits, which now total $104.5 billion40.8% less than at the end of 2022 and 35.5% less than in the same period last year.

That figure it also includes the US$30 billion contributed by the big US banks, without which the fall would have been even greater, of close to US$100 billion in total.

According to First Republicthe rapid flight of money that it suffered from the collapse of the SVB on March 10 was halted after that bailout and by the week of March 27 the situation had begun to stabilize.

Until the Friday In the past, the bank had deposits worth US$102.7 billion, only 1.7% less than at the end of March and a consequence, above all, of the payment of taxes that many clients have to make in April.

As part of his presentation of resultsFirst Republic announced plans to bolster its financial health, including a reduction in its workforce, cuts in the compensation of its executivesless office space and a reduction of non-essential projects.

The bank hopes to cut its number of employees between 20% and 25% during the second quarter of this year, as explained in the note, in which he did not give more details about the layoffs.

As for the results themselves, First Republic won in the first quarter $229 million32.9% less than in the same period of the previous year, but above market expectations.

The Actions of the entity, which had finished the trading session with a rise of 12% while waiting to know the accounts, fell almost 17% in electronic operations after closing.


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