Months before it became the second-largest bank in U.S. history to fail, Silicon Valley Bank quietly laid off 100 to 120 employees, according to an internal email seen by NBC News.
The layoffs, done in January, represented only about 1.4% of SVB’s 8,500 employees. Two people familiar with the layoffs, who spoke on the condition on anonymity, told NBC News that the layoffs appeared to be concentrated in non-client facing roles, particularly in recruiting and talent acquisition.
An email sent Jan. 11 by the company’s chief human resources officer said “change and uncertainty” in the economic outlook were to blame for the job cuts.
“Unfortunately, our efforts to slow spending over the past several months have not been enough and these reductions are necessary,” the email read.
One of the two SVB employees, who was not authorized to speak publicly, said the layoffs were “sorta swept under the rug.”
The company continued to hire in other corners of the company, primarily to backfill certain roles.
But it underscored the bank’s efforts to trim and cut costs during a time when companies in its backyard were cutting jobs too.
The bank did not respond to a request for comment.
As tech giants like Meta laid off as many as 13% of their employees, smaller firms in the San Francisco Bay Area were also making job cuts — from Stitch Fix to Twilio. Higher interest rates from the Federal Reserve had pushed tech companies into undoing Covid-era hiring, as management hunkered down for what they worried would be a slowing U.S. economy.
In late 2022 and into the beginning of 2023, Silicon Valley Bank noticed that deposits were starting to drip out, as the bank’s clientele of tech companies, venture capital funds and private equity firms adjusted to the interest rate environment.
“We’re going to look to cut costs in other areas,” Silicon Valley Bank CEO Gregory Becker told analysts on an earnings call Jan. 19. The bank’s CFO, Daniel Beck, added that “cheaper full-time employees” would help to “optimize that spend.”
Employees of the bank at the time of failure last Friday were paid bonuses the day the FDIC took over, with a retention bonus due on April 1. To keep SVB employees from quitting, the FDIC promised to pay 1.5 times their normal rates for 45 days to ensure an orderly wind down of the bank.
On Sunday, the U.S. government moved to guarantee all deposits — even above the federal deposit insurance of $250,000 per depositor — at Silicon Valley Bank. When the bank re-opened on Monday, the FDIC appointed former Fannie Mae CEO Tim Mayopoulous as the resurrected SVB’s new CEO. The company clarified that employees would be going back to normal pay and benefits, as workers for a “bridge bank” iteration of its former self.
“We are open for business. Therefore we are reverting back to our regular pay rates,” said an email, seen by NBC News, from SVB’s human resources team sent Monday night.
Jason Abbruzzese contributed.
Source: | This article originally belongs to Nbcnews.com
