BlackRock, Inc. BLK is contemplating to eliminate around 400 jobs or roughly 3% of its 13,000 employees in a bid to streamline parts of its business and focus on the areas poised for growth. The layoffs, which mark the largest ever for the $4.6 trillion money manager, were first reported by Bloomberg.
According to sources, the announcement of the headcount reductions, which is expected to take place across a range of business areas, levels of seniority and offices worldwide, will be made in the coming weeks. This may pave the way for new recruits and redirection of resources to growth areas with the company expected to end 2016 with a higher headcount.
Chief Executive Officer Laurence D. Fink had hinted at the job cuts in January by blaming market volatility for compelling the companies to axe jobs. “Having a market decline like this in the first couple of weeks of the year in my mind puts a negativity across the economy,” Fink said in an interview with CNBC. “I actually believe you will start seeing more layoffs in the middle part of the first quarter, definitely in the second quarter.”
Per the Bloomberg report, however, BlackRock said in a memo to employees that the workforce reduction has not yet been affirmed and those affected by the changes will be treated fairly and with respect.
“Being a global leader requires that we continually re-assess our organization to look for ways to serve clients better, operate more efficiently, focus resources on strategic priorities and create new opportunities for our strongest employees,” the memo stated.
Persistent turbulence in the financial markets owing to global headwinds has taken a toll on money management firms as well. Further, mounting regulatory burden and changing investor preferences have also increased the pressure on asset managers. During fourth-quarter 2015, higher operating expenses and muted assets growth led to BlackRock’s lower-than-expected performance.
While BlackRock is well positioned to capitalize on opportunistic acquisitions on the back of a relatively stable base of large institutional clients as well as initiatives undertaken to gain market share in the ETF business, the company has gone through multiple reorganizations over the past four years. The company had eliminated about 300 employees in 2013 and reorganized its senior ranks earlier this year.
Of late, many banks are resorting to job cuts at less profitable units in order to focus more on profitable areas. Several global banks such as The Goldman Sachs Group, Inc. GS, Morgan Stanley MS and Barclays PLC BCS have been trimming their staff to cut costs and sustain profitability.
Currently, BlackRock carries a Zacks Rank #3 (Hold).
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