PNC Financial, BlackRock’s biggest shareholder, will sell its $17bn (£13.8bn, €15.6bn) stake in the asset manager, allowing the bank to go ahead with potential acquisitions.
PNC holds a 22 per cent stake in the company that it purchased in 1995, representing about 35 million shares through common and convertible preferred stock.
PNC’s decision to sell comes as US banks set aside billions of dollars to deal with potential losses, in the expectation that increased unemployment and shuttered businesses will make it impossible for some borrowers to repay their debts.
PNC suffered a 28 per cent fall in net income for the first quarter, as loan-loss provisions increased to $914m.
The exit of the group’s biggest shareholder further consolidates power at the top of BlackRock under Larry Fink, who founded the company three decades ago and holds the roles of chairman and chief executive. Bill Demchak, PNC’s chief executive, will quit the BlackRock board when the sale is complete.
PNC acquired a stake in BlackRock after a falling-out between Fink and Stephen Schwarzman, chairman of Blackstone. When Fink founded the fund manager in 1988 it was initially launched under the Blackstone umbrella as Blackstone Asset Management.
BlackRock shares were down less than 3 per cent in after-hours trading. The asset manager said it would buy $1.1bn of shares from PNC, bringing its share buybacks this year to $1.5bn.
PNC’s stock price rose 6 per cent after the announcement, as investors in the bank welcomed the long-awaited move.
PNC was advised by Citigroup, Evercore and Morgan Stanley.