BlackRock, the world's largest asset manager, plans to announce layoffs of about 3 percent of its global workforce in the coming days, Fox Business reported.
The layoffs of about 600 employees have not yet been reported, but are described as routine within the company, sources said. BlackRock made similar layoffs last year based on employee performance metrics, the people added.
BlackRock's stock price fell 21% in 2022, then rose 6% in 2023. New client money into BlackRock's robust exchange-traded fund business exploded last year, with $187 billion flowing into a basket of securities and into products that trade like stocks at major brokerages. exchange.
On Wednesday, BlackRock expects approval from the Securities and Exchange Commission for a new Bitcoin “spot” ETF. A crypto investment product that tracks the daily price of the world's most popular digital coin will be approved by securities regulators for the first time. Public stock market. Other asset managers are also hoping to get their ETFs approved.
A BlackRock spokesperson did not comment on the layoffs. BlackRock is scheduled to report fourth-quarter results on Friday.
One possible driver for the layoffs is that BlackRock is settling into a more mature business after years of significant increases in assets under management (AUM). Analyst consensus estimates for fourth-quarter earnings to be $8.71 per share, down 2.46% year-over-year.
BlackRock ended the third quarter of 2023 with $9 trillion in assets under management, but the company's assets have declined significantly since peaking at over $10 trillion in 2022 amid instability in financial markets. are doing. The decline in assets comes as BlackRock has become a political lightning rod over the introduction of environmental and social governance investing (ESG), which directs investment funds to publicly traded companies in the sustainable energy sector and companies working to reduce their carbon footprint. What happened also happened. Advocate for corporate governance measures such as board diversity.
Fox Business has revealed that the company is de-emphasizing its ESG business in the US amid the controversy. U.S. portfolio managers are no longer required to consider ESG metrics when not using ESG funds. In 2023, many so-called green investment funds are experiencing asset declines as investments in sustainable energy products fail to generate significant returns and underperform.
Larry Fink, the company's founder and CEO, told FOX Business that he would no longer refer to the word ESG because of the controversy it has caused in political circles.
As Republican officials, including several candidates for the Republican presidential nomination, attack BlackRock and ESG, pension fund operators in red states are withdrawing approximately $6 billion from BlackRock's funds as a form of protest. pulled out.
Conspicuously silent from the BlackRock bashing is former President Donald Trump, the Republican front-runner. One reason may be that BlackRock once managed President Trump's fortune, estimated to be in the billions of dollars. In 2017, President Trump said of Fink, “Larry did a great job for me. He controlled most of my money. I'll tell you, he gave me a great job. It has brought benefits.”
People close to BlackRock told Fox Business that the savings from the layoffs will be used to expand into growth businesses such as technology investments and investing in so-called alternatives to stocks and bonds. It is said that he is scheduled to be killed.
Meanwhile, ESG remains big business for BlackRock's international clients, including large sovereign wealth funds in Europe and the Middle East. Speaking at a recent event hosted by news organization Semaphore, Mark Weedman, BlackRock's head of client business, said ESG is a “customer demand” and that pure sustainable assets account for about $1 trillion in black Said to be managed by the lock.
