Financial services major Bank of America Corp is considering lowering its 34 per cent stake in fund manager BlackRock Inc, which it considers a non-core asset, a media report said.
Attributing to people familiar with the situation, The Wall Street Journal said in a report, "Bank of America has concluded that its 34 per cent share of BlackRock Inc is not a core asset and is weighing a possible reduction of its holdings in the influential New York asset manager."
The report, however, stated that no talks had been held about when or how this might happen and Bank of America still could decide to keep the 64.7 million common and preferred shares of BlackRock that it owns.
The WSJ cited people close to BlackRock as saying that, the asset management firm's executives expect BofA to sell some of its stake.
BlackRock, which oversees $3.15 trillion in client assets, has right of first refusal on any sale.
The company's wide review of what is core and non-core has already resulted in the sale of BofA's stake in Banco Santander SA's Mexican unit, its share of a Brazilian bank, a separate long-term asset-management unit and about $three billion in private-equity assets.
The problem with a potential sale is that now it may see a relatively smaller increase in its capital levels.
The WSJ cited some people close to BlackRock as saying that BofA may have missed a chance to generate a big capital boost from a sale.
At the end of the second quarter, the $9.2 billion fair-market value of the BlackRock stake was $800 million less than the value applied to the investment when it first came on Bank of America's books.
"If they sold today, it would not generate a lot of incremental capital," the report quotes a person familiar with the BlackRock stake, as saying.
Besides, a lockup preventing a Bank of America sale of BlackRock expired Sept 29, 2009, freeing the bank to sell when it wants.
