The international investment company and mutual fund BlackRock, headquartered in New York, was founded in 1988 by Laurence D. Fink. Immediately after the appearance of the company was part of the Blackstone Group. In 1992, renamed subsequently BlackRock. In 1995, due to a conflict of interest with the management of the BlackStone group, the company was sold to PNC Financial Services. The BlackRock foundation was registered as an independent unit in 1998, after which it became public in 1999 by placing shares on the stock exchange.
Few people know that little has changed since that time and the majority of the shares were withdrawn from the market. But look at what the scale of activity at BlackRock.
It was they who absorbed Merrill Lynch in 2006 (one of America’s largest investment companies), then in 2009 Barclays (which managed $ 2.1 trillion). Such acquisitions made BlackRock one of the world leaders in the field of ETF, index and active funds.
The real “golden age” for BlackRock came when the global financial crisis broke out. No one understood the complexities of the mortgage-backed debt market as well as Fink. In 2008, when Lehman Brothers investment bank declared itself bankrupt and Merrill Lynch was sold to Bank of America, BlackRock entered into an important contract with the US Federal Reserve. As an independent expert, not involved in the scandals, she received an order for the analysis of “toxic” assets – first of the Bank Bear Stearns, and then the insurance company AIG. In the future, BlackRock also conducted a security analysis for the Fed’s program called TALF (Term Asset-Backed Securities Loan Facility), aimed at stimulating consumer lending. In addition, BlackRock has entered into contracts with the Fed to analyze the billion-dollar losses in Citigroup’s investment portfolio.
“For the BlackRock team, Greece was a colossal task, comparable to the complete demolition of the Acropolis and rebuilding it again.”
In Europe, BlackRock also played the role of authoritative consultant in 2010, Fink was approached by the ECB, and BlackRock was instructed to study the balance sheets of Irish banks with the Boston Consulting Group and Barclays. In 2011, the company entered into a contract with the central bank of Greece to analyze the financial condition of Greek banks. Two years later, BlackRock was again attracted to the solution of the “Greek problem”. She was assigned to determine the need of Greek banks for financial resources, and BlackRock became an important player in the political arena.
“BlackRock, with its analysis of the banking sector [of Greece], conducted behind the scenes of the European crisis, could tip the scales in any direction.”
In many ways, his success in obtaining large contracts Fink was obliged to Timothy Geitner, first president of the Federal Reserve Bank of New York, and then the US Treasury, with whom he maintained good relations. Friendship with Philip Hildebrand, who served as head of the Swiss National Bank and transferred to BlackRock in 2012, was no less useful. It was he who apparently established contacts between BlackRock and the ECB, thanks to which in 2014 Fink and his team were assigned to develop an asset-backed securities repurchase program that was designed to improve the credit climate in Europe.
“In just a few years, thanks to the agility and foresight of Fink, his small asset management office has become a global player in the industry who behind the scenes presses on the covert springs.”
Huge international funds have a huge impact around the world, the article is written for reference purposes only and should encourage your interest in reading Heike Buchter’s book on BlackRock.