First Citizens, the new owner of now-collapsed Silicon Valley Bank’s (SVB) US operations, has said that it plans to cut 500 roles previously held by SVB employees, reported BBC. The news outlet cited an e-mail by First Citizens’ chief executive Frank Holding, who reportedly said the cut will affect “select SVB corporate functions and does not include any personnel in client-facing positions.”
The story was first reported by US-based news website Axios.
BBC said that the job cuts may amount to around three per cent of the company’s workforce.
SVB and Signature Bank’s collapse had caused alarm globally, and investors along with governments had braced for a ripple effect. Soon after SVB’s collapse, Swiss banking giant Credit Suisse was hastily acquired by rival UBS. It recently said that it was pressured by the Swiss government for the acquisition to prevent the collapse of Credit Suisse.
SVB’s UK operations were acquired by HSBC for a nominal price of one pound.
Holding reportedly said in the e-mail that “The team in India that supports SVB is not impacted by the changes”.
First Citizens, based in North Carolina in the US, has been acquiring troubled banks and has been one of the largest buyers of troubled banks in recent times.
CEOs grilled
Last week, CEOs of SVB and Signature Bank were grilled by US lawmakers in a hearing in US Congress. They were railed against for the lenders’ risk management practices and lofty executive pay.
The hearing was the first significant public appearance of former Silicon Valley Bank chief executive Gregory Becker. During the hearing, he chose to characterise the bank as well-managed and blamed the collapse on factors beyond his control.
But the failure of both SVB and Signature Bank — which also had former executives on the witness stand — has been blamed in government reports on poor management, given the speedy growth of both lenders.
“You made a really stupid bet that went bad, didn’t it?” asked Louisiana Republican Senator John Kennedy in an exchange with Becker over a decision to end a programme to manage interest rate risk as the Federal Reserve shifted policy.
“Senator, there were a series of events, unprecedented events that occurred that led us to where we are today,” Becker said.
Georgia Democrat Raphael Warnock pressed Becker and asked if he felt he should have done anything differently. Becker said he, along with his other executives, “made the best decisions they could have” given the information at the time.
He was repeatedly asked about his compensation. Becker said that the decision rested with the bank’s board. Becker’s compensation over the last four years totalled USD 40 million. Becker said that the amount was decided by the bank’s board.
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