Bank of America to Sell Much of BlackRock Stake

(Reuters.com)
* Bank of America to offer most of 42 million shares

* Bank of America, PNC to remain major shareholders

* BlackRock shares down 4.3 pct, BofA shares edge up

BOSTON/NEW YORK - Bank of America plans to sell more than half its stake in BlackRock Inc, the companies said Wednesday, putting an end to months of speculation about how the bank would begin to reduce its big investment in the world's largest asset manager.

Under the share sale, BlackRock plans to offer some 42 million shares, allowing Bank of America and PNC Financial Services Group to reduce their stakes in the New York-based firm.

BlackRock shares fell as much as 5.1 percent on Wednesday as analysts said it could be somewhat cumbersome for the company to push so many shares into the market. But many also felt it would also be a long-term positive for the firm because it clarified the banks' intentions.

Tighter bank capital regulations under Basel III have long been expected to force the banks to shed their ownership stakes in BlackRock.

In a note to investors, Nomura Securities analyst Glenn Schorr said he expected that while the offering "will weigh on the stock in the near term, we think it is a long-term positive as it removes an overhang on BLK shares."

Shares of BlackRock, which oversees about $3.4 trillion in client assets, have lagged the rest of the asset management industry this year, amid concerns that share sales would be a drag.

The share offering will be led by investment banks, Bank of America Merrill Lynch and Morgan Stanley, under a previous BlackRock registration statement.

As part of the offering, Bank of America will offer 34.5 million shares, reducing its stake in BlackRock to as little as 12.6 percent of the company from 33.9 percent previously, according to an offering document.

PNC Financial Services Group will offer up to 7.5 million shares, BlackRock said, reducing PNC's ownership of BlackRock to 20.3 percent from 24.3 percent. PNC has been a longtime BlackRock shareholder.

William Katz, an analyst at Citigroup, said in a note to clients the deal could be priced as soon as next week.

Bank of America, based in Charlotte, North Carolina, in the past has declined to comment on what it planned to do with the big stake in BlackRock, which it acquired with its purchase of investment bank Merrill Lynch & Co in 2008. Merrill had gained the stake by merging its asset management business with BlackRock in 2006.

Bank of America spokesman Jerry Dubrowski said the transaction was consistent with the bank's strategy to sell "non-core assets" to focus on traditional lending businesses. In the last year, the bank has sold roughly $10 billion in assets, including its stakes in South American and Latin American banks.

The new international Basel III capital requirements, effectively prevent banks from holding big stakes in other companies, as part of a series of reforms intended to prevent another financial crisis.

Bank of America's sales also were part of its $45 billion U.S. government bailout aid repayment, which required the bank to raise $3 billion in capital through asset sales. For Bank of America, the sale could potentially boost its Tier 1 capital ratio by 6 basis points and free up its capital for other opportunities, analysts at Sandler O'Neill said in a note to clients Wednesday.

PNC said in a statement that it still considers BlackRock to be a "key component" of its strategy.

"Adjusting our stake in BlackRock provides a unique opportunity to better align our investment to our risk and capital management philosophy," a PNC spokesman said in a statement.

Based on Wednesday's market price for BlackRock shares, the sale of 42 million shares of common stock would raise about $7 billion to be divided between the banks.

The share sale would also position Barclays PLC as BlackRock's second biggest shareholder after PNC. The British bank took a 20 percent stake in the asset manager as part of its deal to sell Barclays Global Investors to BlackRock last year.

BlackRock chief questions Obama's housing programs

Larry Fink, chairman and CEO of BlackRock, said he is concerned about programs from the Obama administration that might curb foreclosures but also hurt the mortgage-market recovery. "I am just very worried," Fink said. "How do we get a vibrant securitization market back when we are doing these things in the short run that are good for the banking system and good for the homeowner but not as good as it should be?"

more at http://www.bloomberg.com/apps/news?pid=20601087&sid=alAm1oFsgoGc

BlackRock planning global trading platform

Asset manager BlackRock is to launch its own global trading platform, it has emerged.

According to the Financial Times, the company intends to utilize the system to rival those used by many firms on Wall Street.

The business will have around $3,000 billion in assets under management once it has completed its acquisition of Barclays Global Investors (BGI) in December and it has appointed Minder Cheng of BGI to oversee the launch of the platform.

BlackRock said in a leaked internal memo seen by the news source that the new offering will "fully realize the cost efficiencies and trading opportunities across all asset classes as we become one of the largest trading operations in the world".

Those familiar with the plan - which is said to still be in its early stages - explained that BlackRock will not be charging fees for the service due to the fact that it is being introduced in order to save clients money.

The company reached a deal worth around $13.5 billion for BGI in June.

Barclays shareholders approve Barclays Global Investors sale to BlackRock

Shareholders at Barclays have backed the sale of investment management unit Barclays Global Investors to fund manager BlackRock.

The move was approved at the bank's annual general meeting (AGM) in London today (August 6th).

Since voting began this morning 99 per cent of investors voted in favor of the transaction after they were recommended to approve the deal by the bank. A final count is expected to be announced later today.

The sale price of the unit will be $14.2 billion, with chairman Marcus Aguis noting that the value has increased from the initial figure of $13.5 billon after shares in BlackRock rose.

According to Bloomberg, he told investors at the AGM that the BlackRock offer is "compelling" adding that the move "allows Barclays to retain an ongoing interest in the potential upside from the larger combined business while unlocking significant capital in the short term".

The deal was first agreed in June and will involved Barclays retaining a 19.9 per cent stake in BGI.

BlackRock fund gives ordinary Americans a crack at PPIP

BlackRock is putting together an investment fund that it says will give ordinary Americans a chance to profit from the financial bailouts that they are paying for. The company quietly filed plans on Friday to raise money for the vehicle.

For investors, the potential risks are considerable. The closed-end fund is to buy distressed mortgage securities from financial companies — the very investments that have hurt so many banks. It would be the first product aimed specifically at Main Street that is linked to the government’s now-diminished Public-Private Investment Program, which is meant to help purge these institutions of their worrisome investments.
more at
http://www.nytimes.com/2009/07/27/business/economy/27fund.html

Barclays in talks to sell asset-management arm for $10B

BlackRock and Bank of New York Mellon are reportedly potential bidders for Barclays Global Investors, Barclays' asset-management division. An initial auction for BGI's exchange-traded funds unit, iShares, resulted in negotiations over the potential sale of BGI. Last month, Barclays agreed to sell iShares to CVC Capital Partners, but the bank can seek alternative bidders under the sale's "go-shop" provision.

more at

http://www.bloomberg.com/apps/news?pid=20601208&sid=av3WfOJhdsAQ&refer=finance