Financial Firms Plan Cuts Over Market Uncertainty
With a looming slowdown, U.K.’s exit from the EU, and money being pulled out of active funds into passive management, more financial industry services jobs are at risk.
BlackRock, the largest fund manager in the world, is planning to cut 500 staff, or 3 percent of its global workforce, according to an internal memo sent by the firm’s president Rob Kapito on Thursday, Reuters reported.
«We are always looking for ways to improve how we operate, to simplify our processes and structures, to prudently manage expenses, and to accelerate growth. The changes we are making now will help us continue to invest in our most important strategic growth opportunities for the future,» Kapito said in the memo.
Industry-Wide Restructuring
BlackRock’s job cuts follow rival ETF giant State Street, which said earlier this week that it plans to cut its senior management ranks by 15 percent. In fact, there has been a raft of job cuts announced since January 1 among firms globally.
Bloomberg cited Banco Santander’s Polish unit, which plans to reduce its workforce by 1,400, or 11 percent, Morgan Stanley, which announced cuts in its fixed-income, equities and research divisions, Caixiabank, and Nomura, which plans to reduce its Europe workforce as it consolidates less profitable markets.
Under Pressure
The chaos of the markets in the last quarter of 2018 meant that low-cost, passively managed ETFs – of which BlackRock is a pioneering provider – emerged as winners as they pulled money away from hedge funds.
Indeed, BlackRock saw a record monthly haul of $25 billion in November. But while money is flowing into BlackRock, much of it is being allocated to passive, low-fee funds – some of its cheapest funds charge a mere 3 basis points a year. As a result, BlackRock's shares have fallen by one-third from its all-time high in 2018.
BlackRock has $6.4 trillion in assets under management and a global workforce of 15,000.
