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The
transaction comes as massive banks have faced pressure to
simplify their businesses since the global financial crisis and
marks the largest in a series of deals reshuffling the
cash-management industry before a set of costly regulatory
reforms take effect in 2016.
The agreement is expected to lift the global cash-management
business at BlackRock, the world's largest asset manager, from
about $285 billion to $372 billion.
The New York-based company - a manager of mutual funds,
exchange-traded funds, private equity pools and other investment
products - is already the world's largest money manager, with
$4.5 trillion in assets.
The company's heft is partly the result of similar acquisitions,
including that of Merrill Lynch & Co's investment management
business in 2006. Merrill Lynch was later acquired by Charlotte,
North Carolina-based Bank of America Corp and remains a major
distributor of BlackRock products to individual investors and
institutions.
"This transaction is consistent with Bank of America’s ongoing
efforts to simplify its business, in this instance, by
outsourcing certain product manufacturing functions to an
industry leader," said Bank of America spokeswoman Susan McCabe
in an emailed statement, adding that the bank would now focus on
distributing money market funds from BlackRock and other
third-party providers.
The profitability of money-market funds, which invest in
relatively low-risk corporate and government debt that can be
paid back within days or weeks, has been hemmed in by U.S.
interest rates hovering near zero.
And mergers and acquisitions have trimmed the money funds
industry from 75 providers in the U.S. last summer to just 67
this year, according to Crane Data, an industry research
service.
Terms of the transaction were not disclosed. The deal is
expected to close next year, subject to standard approvals,
BlackRock said in a statement.
(Reporting by Trevor Hunnicutt; Editing by Christian Plumb)
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