First Republic Bank, which has its headquarters in San Francisco, is reducing its workforce by up to 25% in response to the Silicon Valley Bank crisis that occurred in March across the country. According to Bloomberg, client deposits fell by a startling 41% to $104.5 billion in the first quarter, falling short of the $137 billion target.
In addition to layoffs, the corporation is considering other unnamed strategic measures as it strives to maintain its dominant position in the US in light of the “unprecedented” outflow of deposits.
Deposits only decreased by 1.7% between the end of March and April 21. This indicates that customer activity has generally remained stable, according to the company.
“Though we faced challenges and uncertainties with the stabilization of our deposit base and the strength of our credit quality and capital position, we continue to take steps to strengthen our business,” Chief Executive Officer Mike Roffler is reported to have said on a conference call.
The company has retained 90 percent of its wealth professionals and remains “fully committed” to the business, Roffler added.
According to the corporation, uninsured deposits will continue to make up a lower portion of its entire deposit base. Additionally, it intends to reduce the number of loans it makes and will instead concentrate on creating loans that may be sold on the secondary market.
“We intend to retain servicing on these loans as we always have so that we remain the primary point of contact for our clients,” Roffler said on the call. “Through these actions, we intend to reduce the size of our balance sheet, reduce our reliance on short-term borrowings and address the challenges we continue to face.” First Republic shares fell 12 percent in late New York trading.
What is happening with First Republic Bank?
Earlier this month, the United States government assumed “receivership” of the defunct Silicon Valley Bank after a major exodus of depositors was sparked by the sale of securities that were offered for sale.
The financial crisis brought to light firms like First Republic Bank that had significant amounts of unrealized and sometimes unreported losses on their balance sheets.
According to Bloomberg, the First Bank executives thought about selling the business as a whole. According to the article, some buyers aren’t even thinking about purchasing the bank because of the significant unrealized losses.
Since its founding in 1985, First Republic has grown the range of wealth management services and related products it provides to the very wealthy.
However, according to Bloomberg, some of its advisers have recently defected to competitors.