- By Mariko Oi
- business reporter
The new owner of Silicon Valley Bank’s (SVB) US operations, First Citizens, is cutting around 500 roles held by former SVB employees, the BBC has learned.
Two months ago, First Citizens acquired the business following the collapse of SVB.
SVB’s UK business was acquired in March by London-based banking giant HSBC for a nominal price of £1 ($1.25).
In an email seen by the BBC, First Citizens chief executive Frank Holding highlighted the problems SVB faced earlier this year and said the cuts would affect: “choose public functions.” SVB company and did not put any personnel in positions that come in contact with customers.”
“The team in India supporting SVB is not affected by the changes,” he added.
The BBC understands that the job cuts amount to about 3% of the company’s total workforce.
The story was first reported by US-based news website Axios.
First Citizens is headquartered in Raleigh, in the US state of North Carolina and calls itself the largest family-controlled bank in the United States. It has been one of the biggest buyers of troubled banks in recent years.
Under the agreement, all 17 former branches of SVB were opened under the First Citizens brand.
In the UK, HSBC purchased SVB’s UK operations in a deal chaired by the government and the Bank of England. Earlier this month, HSBC said its profits had increased by $1.5 billion from the takeover.
Also this month, Greg Becker, a former head of SVB, apologized in a congressional hearing, blaming rising interest rates and customer withdrawals as the main cause of the bank’s collapse. row.
Interest rates were slashed sharply during the 2008 global financial crisis and again during the Covid pandemic as central banks around the world sought to encourage economic growth.
But interest rates have risen over the past year as central banks try to rein in soaring prices.
These rate hikes affected the value of the investments where most banks kept some of their clients’ money and contributed to the failure of banks in the US.
His explanation contrasts with that of regulators, who blame SVB management for failing to manage interest rate risk or diversify its business.