BlackRock plans layoffs amid ESG pullback and spot ETF approvals
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According to reports, BlackRock, the world’s largest money management company, plans to announce layoffs of about 3% of its global employees, totaling about 600 employees.
The decision comes as BlackRock anticipates approval of its spot Bitcoin exchange-traded fund (ETF) by the U.S. Securities and Exchange Commission (SEC).
While the layoffs are described internally as routine, they come after a period of rapid growth in assets under management (AUM). The layoffs are expected to be announced in the coming days.
BlackRock streamlines processes
About 600 positions will be cut, consistent with BlackRock’s approach last year of making layoffs based on employee performance metrics.
Despite falling 21% in 2022, BlackRock shares rebounded in 2023, rising 6%.
According to Fox Business ReportA BlackRock spokesman declined to comment on the layoffs. The company is scheduled to report fourth-quarter (Q4) earnings on Friday.
One potential reason behind the layoffs is that BlackRock’s business is moving to a more mature stage after years of strong growth in assets under management (AUM). Analysts consensus expect fourth-quarter earnings to decline 2.46% year over year to $8.71 per share.
BlackRock had $9 trillion in assets under management at the end of the third quarter of 2023, down from a peak of more than $10 trillion in 2022.
The asset decline comes as BlackRock has been the focus of political scrutiny for its use of environmental social governance (ESG) investing.
The strategy involves directing investment capital to publicly traded companies in the sustainable energy sector or companies actively working to reduce their carbon footprint, while promoting corporate governance measures such as board diversity.
Still, $187 billion has poured into BlackRock’s robust exchange-traded fund (ETF) business, whose products track a basket of securities and trade on major exchanges.
BlackRock’s Bitcoin ETF gets approval
If the SEC approves the company’s spot Bitcoin ETF application, BlackRock will join the ranks of the top asset managers offering crypto investment products.
BlackRock expects approval on January 10, coinciding with the SEC’s deadline to approve or reject the ARK 21 Equity Spot Bitcoin ETF.
In contrast, the U.S. Securities and Exchange Commission set a January 15 deadline for applications for the BlackRock Bitcoin ETF. This follows a series of revised forms submitted by spot Bitcoin ETF applicants in recent days.
On January 5, BlackRock filed a 19b-4 amendment to its spot BTC ETF application, joining other asset managers such as Valkyrie, Grayscale, Bitwise, Hashdex, ARK 21Shares, Invesco Galaxy, Fidelity, Franklin Templeton, VanEck, and WisdomTree be consistent. the same day.
While these filings represent a critical step in the SEC approval process, completing the S-1 filing is critical for U.S. exchanges to list stocks as investment securities with direct exposure to cryptocurrencies.
