BlackRock, the world’s largest money manager, is reportedly gearing up for layoffs, expecting to cut about 3 percent of its global workforce, or approximately 600 employees. Although not formally announced, these cuts are being labeled internally as routine, following a similar round of layoffs last year tied to employee performance metrics.
Despite facing job reductions, BlackRock’s stock rebounded by 6 percent in 2023 after a 21 percent decline in 2022. The company experienced a surge in new investments into its Exchange Traded Fund (ETF) business, attracting $187 billion in inflows. This success comes alongside BlackRock’s anticipation of Securities and Exchange Commission (SEC) approval for its Bitcoin “spot” ETF, marking a milestone in offering a crypto investment product tied to the daily price of Bitcoin on the stock market.
The company declined to comment on the reported layoffs but is scheduled to unveil its fourth-quarter earnings soon. Analysts anticipate a slight decline in earnings, attributing this trend partly to BlackRock’s transition from rapid asset growth to a more stabilized business phase.
BlackRock’s assets under management (AUM) decreased from a peak of over $10 trillion in 2022 to $9 trillion by the end of the third quarter in 2023, affected by volatile financial markets. Additionally, the firm’s focus on Environmental, Social, and Governance (ESG) investing has drawn criticism, leading BlackRock to de-emphasize its ESG business in the U.S. This move involves exempting U.S. portfolio managers from considering ESG metrics unless they are working with ESG funds.
CEO Larry Fink aims to downplay ESG discussions due to political controversies. While BlackRock faces criticism from Republicans and pension fund withdrawals, notably absent from the criticism is former President Donald Trump, who previously praised BlackRock’s management of his assets.
The savings from the layoffs will reportedly be directed towards expanding into growth areas such as technology investing and alternative products. Despite reduced emphasis in the U.S., ESG remains a significant aspect for BlackRock’s international clientele, with around $1 trillion in sustainable assets managed by the company for foreign clients, notably sovereign wealth funds in Europe and the Middle East.
