In the wake of the collapse of First Republic Bank, eye-popping details about the compensation of its employees have emerged. Some were raking in more than $10 million annually before the bank’s downfall, with one unnamed individual even exceeding JPMorgan Chase & Co (NYSE:JPM) CEO Jamie Dimon’s pay with a staggering $35 million yearly haul, according to Bloomberg.
The San Francisco-based bank, now under the control of JPMorgan following a seizure by regulators, was known for its ultra-generous employee incentives.Â
Those benefits, while enriching staff, proved disastrous for the bank, according to the report. By dangling enticing interest-only mortgages to high-income borrowers, First Republic fueled a lending frenzy that swelled its size, but ultimately left it hollow.
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First Republic’s high-risk strategy blindsided potential rescuers who were startled by compensation figures when the FDIC granted access to the bank’s data room, Bloomberg said.
Despite the jaw-dropping paychecks, the fortunes of First Republic’s employees reversed sharply when the bank fell. Those whose earnings were tied to the bank’s shares saw their investments drop to pennies, and regulators are now investigating whether insider trading contributed to the collapse.
As First Republic folds into JPMorgan, the fate of its employees hangs in the balance. Marianne Lake, co-head of JPMorgan’s consumer and community bank, said in a presentation earlier this week that employees of the faltered bank would be informed of their futures later this month.
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