BlackRock Has Edge for Credit Suisse Unit, Citigroup Says

BlackRock Inc. (BLK), the world’s largest exchange-traded fund provider, has an “edge” over State Street Corp. in buying Credit Suisse Group AG (CSGN)’s ETF business, according to Citigroup Inc. analysts.

An acquisition would allow BlackRock to bolster the presence of its iShares ETF unit in Europe, Citigroup analysts led by William Katz wrote in a note today to clients. BlackRock has a history of integrating smaller asset managers and it has stronger financial flexibility, while State Street is more focused on returning capital to shareholders and could be restricted as a result of activist investors, according to the note.

Credit Suisse has put its European ETF business, which has about $17 billion in assets under management, up for sale and potential acquirers include New York-based BlackRock and Boston- based State Street, according to a Reuters report on Oct. 19. Credit Suisse has 58 ETFs listed in Switzerland that invest in mostly equities, with more than a 5 percent market share in Europe, according to the Citigroup note.

Melissa Garville, a spokeswoman for BlackRock, declined to comment. BlackRock has more than $700 billion in ETF assets globally. The firm announced plans Oct. 15 to cut fees for six ETFs and create four new ones as it seeks to fend off competition from companies such as Vanguard Group Inc. and Charles Schwab Corp.

To contact the reporter on this story: Alexis Leondis in New York at aleondis@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net

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