Blackrock to Lay Off Employees as the Company Grows, ESG to Retreat, and Approval of a Bitcoin ETF

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Last Updated on January 7, 2024 by Bitfinsider

BlackRock, the largest money management company globally, intends to announce layoffs of roughly 3% of its global workforce in the coming days.

A person with knowledge of the situation claims that the approximately 600 individuals whose jobs have been let go are being referred to internally as standard procedures. According to the source, BlackRock carried out a similar wave of layoffs last year based on criteria related to employee performance.

Following a 21% decline in 2022, BlackRock’s shares saw a 6% increase in 2023. $187 billion in new investor capital poured into BlackRock’s stable Exchange Traded Fund business last year, propelling the company forward with products that track a basket of securities and trade like stocks on major exchanges.

BlackRock anticipates receiving approval from the Securities and Exchange Commission on Wednesday for its new Bitcoin “spot” ETF. This will mark the first time that securities regulators have authorized a cryptocurrency investment product to trade on a public stock market, tracking the daily price of the most popular digital coin globally. For their ETFs, other asset managers are also anticipating approval.

Regarding the layoffs, a BlackRock representative would not comment. On Friday, BlackRock is expected to release its fourth-quarter financial results.

BlackRock is entering a more mature stage of its business after years of explosive expansion in assets under management, or AUM, which could be one of the driving forces behind the layoffs. The fourth quarter earnings consensus of analysts predicts a 2.46 percent year-over-year fall in earnings to $8.71 per share.

BlackRock’s assets under management (AUM) ended the third quarter of 2023 at $9 trillion, while the company has experienced notable asset decreases since its peak of over $10 trillion in 2022 due to unstable financial markets. The decrease in assets coincided with BlackRock’s emergence as a political lightning rod due to its support of Environmental Social Governance (ESG) investing, which allocates capital to publicly traded companies in the sustainable energy sector or those that are lowering their carbon footprints and supporting corporate governance principles like diversity in the boardroom.

It was heard that the company has been downplaying its ESG business in the US as a result of the scandal. When not utilizing ESG funds, U.S. portfolio managers are no longer obligated to take ESG indicators into account. Since investments in sustainable energy goods have not yielded substantial returns, several so-called green investment funds have had asset declines in 2023 along with poor performance.

Larry Fink, the CEO and creator of the company, stated that he will no longer use the acronym E-S-G due to the uproar it has caused in political circles.

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