In another example of banks being too big to fail, the Silicon Valley Bank (SVB) had its US operations purchased by First Citizens, and they started their ownership with the elimination of 500 lower-level employees. When SVB failed, two other US banks had gone with it and forced authorities to step in.
These employees are what the new owners consider to be back-end people, or “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.” This kind of change that place importance on foreign workers over American employees is something banks and other institutions have used for decades now.
Foreign banks also benefitted greatly from SVB’s collapse. HSBC took over their UK operations for the criminally low cost of $1.25, and as a result, added over $1.5 billion to their bottom line for FY 2023. Profits of this magnitude and immediate gratification are nearly unheard of outside of banks. With such a concentrated and easily found source of income, First Citizens has been buying up distressed banks across the nation.
Undertaking a strategy that puts profits over people has worked tremendously well for the bank, and given the collapse that SVB has just undertaken, these now-cut workers shouldn’t have been surprised by this move at all. Given the rapid collapse of SVB and all the warning signs that proceeded it, nobody had any illusions about the bank’s ability to stay open.
However, the fact that these workers stayed on with a sinking ship should have gotten them promoted, not fired.