BlackRock Inc., the largest publicly traded asset manager in the U.S., is cutting jobs for the first time in its 20-year history as slumping financial markets force the mutual-fund industry to shrink.
Dismissal notices will be issued this week, the New York- based company said yesterday in a memo to its 5,500 employees, a copy of which was obtained by Bloomberg News. The number of people and positions affected weren’t disclosed. Bobbie Collins, a BlackRock spokeswoman, said details wouldn’t be made public until after the end of the year.
“Times like these require fiscal discipline,” the unsigned memo said. “We expect it of the companies in which we invest and we must expect it of ourselves.”
BlackRock said Oct. 21 that third-quarter earnings fell 15 percent, the first drop in two years, as investors pulled money from its funds. Assets declined 12 percent to $1.26 trillion. Fidelity Investments, the world’s largest mutual-fund company, Janus Capital Group Inc. and Putnam Investments are among the money managers that plan to eliminate 3,500 positions to cope with market losses and client defections.
The Standard & Poor’s 500 Index has tumbled 42 percent this year, the biggest decline since 1931. Credit-related losses and writedowns at financial firms have topped $966 billion, threatening global economic growth. Banks and brokerages worldwide have announced more than 166,000 job cuts since the subprime-mortgage market’s collapse last year. Citigroup Inc., the fourth-biggest U.S. bank by market value, said yesterday it will slash 52,000 workers.
‘Not Immune’
“A wide variety of businesses across industries and regions have reported weak third-quarter results and even weaker expectations for fourth quarter 2008 and for 2009,” BlackRock said in the memo, which was reported by the Wall Street Journal yesterday. “BlackRock is not immune.”
Chief Executive Officer Laurence Fink, who co-founded the company in 1988, said last week he’s seeing signs of “capitulation,” a broad selloff that usually comes before the end of a bear market.
“A year ago, I said we won’t see a bottom until we see a capitulation,” Fink, said at a Nov. 11 investment conference in New York. “We are seeing a capitulation” and a recovery may begin by mid-2009, said Fink, 56.
The bankruptcy in September of Lehman Brothers Holdings Inc. and losses at a money-market fund run by Reserve Management Corp. triggered $53.8 billion in withdrawals from BlackRock’s cash and securities-lending funds during the three months ended Sept. 30. Investors also pulled $6.7 billion from stock and bond funds.
Fidelity, based in Boston, is cutting 3,000 jobs, or 7 percent of its 44,400-member workforce, after assets declined about 13 percent in the first nine months of the year. Denver- based Janus is eliminating about 115 jobs, or 9 percent. Boston- based Putnam Investment said yesterday it fired 12 fund managers and eliminated 35 other positions, a reduction of about 2 percent.
