Blackrock CEO Seeking Partner To Buy 35% BofA Stake Per Charlie Gasparino
A few days ago, we penned The BlackRock - Bank Of America Ownership Catch 22, in which we discussed the incestuous cross-onwership relationship between the two companies. Then we said:
"It is well known that Bank of America owns 34% of BlackRock via a legacy
position inherited from Merrill Lynch, arguably the most valuable part
of the business. As of today, the stake is worth around $11.5 billion.
Yet what may be a little less known is that BlackRock has also returned
the favor, and is now the largest holder of Bank of America, owning 5.35% of the outstanding BAC shares, for a total value of $6.6 billion. Does
that mean that there is a wash in there somewhere? Who cares. But one
thing that certainly is involved, is a massive conflict of interest,
especially in the context of litigation. And a big question mark - to
claim that BlackRock is willing to impair a nearly $7 billion investment
is naive. Instead, due to the incestuous nature of Wall Street, and the
cross pollination of MBS holders, is today's action merely a ploy to
get some of the more "impacted" parties to promptly settle and eliminate
any possible future litigation? PIMCO, for one, and the FRBNY fir
another, have the most to lose if the MBS crisis escalates, and if all
MBS are unwound. Which means that somehow this is simply another
diversion, with the real action taking place somewhere."
The action is indeed "elsewhere" - Charlie Gasparino has just reported that Larry Fink is seeking a partner to buy 35% of Bank of America. What better way to sweep all the problems underneath the rug than to just buy them all up...
More from Fox Business:
Blackrock (BLK: 167.29 ,+1.02 ,+0.61%) CEO Larry Fink is approaching investors across the globe to step in and possibly buy a chunk of the large money management company that is currently owned by Bank of America (BAC: 11.44 ,+0.08 ,+0.75%), people close to matter tell FOX Business Network.
Bank of America owns a 34% stake in Blackrock, an investment that transferred to the Charlotte, N.C.-based bank when it purchased Merrill Lynch in 2008. Merrill bought a stake in Blackrock in 2006; at the time it was one of the most high-profile deals on Wall Street, with Merrill selling Blackrock’s mutual funds and other investments to clients of its massive brokerage division.
But times have changed on Wall Street since the housing market tumble, nearly toppling every major bank including BofA. Since the 2008 financial collapse, regulators have prodded banks to increase their capital levels as a safety cushion against losses. The recent US and global financial reform rules will also force banks to increase their capital, which is pushing BofA to unload its stake in Blackrock
People at Blackrock believe that in the coming months BofA will do just that, and for that reason, Fink, the money management company’s CEO and founder, is traveling the world seeking potential investors. A person close to Fink says he has investors lined up should BofA decide to make its move and sell its Blackrock shares.
A spokeswoman for Blackrock declined to comment; a spokesman for BofA didn’t return a call for comment.
And, as a reminder:
Bank of America Holders: