Bank of America Said to Consider Selling Stake in BlackRock
Bank of America Said to Consider Selling Stake in BlackRock
Jin Lee/Bloomberg
Bank of America has been selling investments and units not considered to be critical for its retail banking, home lending, wealth management and capital markets units.
Bank of America has been selling investments and units not considered to be critical for its retail banking, home lending, wealth management and capital markets units. Photographer: Jin Lee/Bloomberg
Bank of America Corp. is considering reducing a 34 percent stake in BlackRock Inc., the world’s largest asset manager, a person briefed on the matter said.
The bank, which acquired the holding through the purchase of Merrill Lynch & Co. last year, hasn’t reached a final decision, and no deal is imminent, the person said, declining to be identified because the deliberations aren’t public. The bank’s carrying value for the stake was $10.1 billion as of June 30, and the fair market value was $9.3 billion, according to an Aug. 6 regulatory filing.
Bank of America has been selling investments and units not considered to be critical for its retail banking, home lending, wealth management and capital markets units. Merrill Lynch originally acquired 49.8 percent of BlackRock by trading its asset management business in 2006. The holding was diluted last year through an exchange of shares.
“It’s not a core holding for Bank of America in any particular way,” said Gary Townsend, president of Hill-Townsend Capital LLC, a Chevy Chase, Maryland-based hedge fund that holds BlackRock and Bank of America. Regulators who prefer the bank take less risk and BlackRock Chief Executive Officer Larry Fink are probably pressing Bank of America and PNC Financial Services Group Inc., which also holds 34 percent, to shed some shares, he said. “From Larry Fink’s standpoint there is no particular advantage to having Bank of America and PNC holding such large stakes,” Townsend said.
Jerry Dubrowski, a spokesman for Charlotte, North Carolina- based Bank of America, said he couldn’t comment, as did Bobbie Collins of BlackRock. The Wall Street Journal reported the bank’s considerations yesterday.
BlackRock, based in New York, has dropped 35 percent this year to $151.58 in New York Stock Exchange composite trading, giving it a $29 billion market capitalization. The firm oversees about $3.2 trillion.
Bank of America in the past year has sold its Columbia Management Group, its First Republic Bank catering to wealthy individuals, stakes in Brazilian and Mexican banks and about $3 billion in private-equity holdings. The bank is also selling its Balboa Insurance unit acquired through the 2008 purchase of Countrywide Financial Corp.
The bank hasn’t formed a strategic partnership with BlackRock, unlike its 11 percent stake in China Construction Bank that includes training of Chinese bankers to offer credit cards and other products.
When Bank of America Chief Executive Officer Brian Moynihan was asked about selling shares in China Construction or BlackRock on July 16 he called the Chinese bank “a strategic asset for us” and said BlackRock “is a great company and we are happy with it.”
To contact the reporter on this story: David Mildenberg in Charlotte at dmildenberg@bloomberg.net.
Rate These Stories
Rate this Page