BlackRock, the world’s largest money management firm, plans to announce layoffs in the coming days of about 3 percent of its global workforce, Fox Business has learned.
The job cuts of around 600 employees, which have yet to be reported, are being described internally as routine, according to a source familiar. Last year, BlackRock did a similar round of layoffs gauged on employee performance metrics, the source added.
Shares of BlackRock rebounded in 2023, up 6 percent after falling 21 percent in 2022. New customer money into BlackRock’s solid Exchange Traded Fund business exploded last year with $187 billion of inflows into the products that follow a basket of securities and trade like stocks on major exchanges.
On Wednesday, BlackRock is expecting approval from the Securities and Exchange Commission for its new Bitcoin “spot” ETF — the first time a crypto investment product tracking the daily price of the world’s most popular digital coin will be approved by securities regulators to trade on a public stock market. Other asset managers are also expecting approval for their ETFs.
A BlackRock spokesman would not comment on the layoffs. BlackRock is scheduled to announce fourth quarter earnings on Friday.
One possible impetus for the layoffs is that BlackRock, after years of wild growth in assets under management or AUM, is settling into a more mature phase in its business. Analyst consensus for earnings in its fourth quarter projects a 2.46 percent decline year-over-year to $8.71 a share.
BlackRock finished the third quarter of 2023 with $9 trillion in AUM though the firm has seen significant asset declines since it reached a peak of more than $10 trillion in 2022 amid wobbly financial markets. The decline in assets also came as BlackRock became a political lightning rod over its embrace of Environmental Social Governance investing, or ESG, which directs investment dollars into public companies in the sustainable energy space, or those that are taking steps to reduce their carbon footprint and advocate corporate governance measures such as boardroom diversity.
The firm has been de-emphasizing its ESG business in the U.S. amid the controversy, Fox Business has learned. 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 have seen declines in asset amid weak performance as investments in sustainable energy products fail to produce significant returns.
Company founder and CEO Larry Fink told Fox Business he won’t use the mention of the letters E-S-G any longer because of the controversy it has stirred up in political circles.
As top Republicans, including several running for the GOP presidential nomination, have attacked BlackRock and ESG, those running pension funds in red states have yanked about $6 billion from BlackRock funds as a form of protest.
Noticeably quiet from the BlackRock bashing is the GOP front-runner, former President Donald Trump. One reason may be because BlackRock once managed Trump’s fortune, estimated in the billions of dollars. In 2017, Trump said of Fink: “Larry did a great job for me. He managed a lot of my money. I have to tell you, he got me great returns.”
People close to BlackRock tell Fox Business that savings from the job cuts will be used to expand into growth businesses such as technology investing and investing in so-called alternative products as opposed to stocks and bonds.
ESG, meanwhile, remains a big business with BlackRock’s foreign customers, including large sovereign wealth funds in Europe and the Middle East. Mark Wiedman, head of BlackRock’s client business, speaking at a recent event sponsored by the news outlet Semafor, called ESG “a demand from clients,” with around $1 trillion in pure sustainable assets being managed by BlackRock.