Business Standard

US probes Blackrock, Vanguard over stakes in banks


Banking regulators are probing if asset management giants Blackrock, Vanguard and State Street are sticking to their passive roles when it comes to investment­s in US banks, the Wall Street Journal reported on Tuesday.

Jonathan Mckernan, a member of the Federal Deposit Insurance Corp's (FDIC) board, is championin­g an order that would prevent fund managers from owning more than 10 per cent stake in Fdic-regulated banks while it examines the matter, the report said.

Mckernan and

Rohit Chopra, another FDIC board member who is also the director of the




Bureau, have jointly held meetings with

Blackrock and

Vanguard to discuss their holdings, the report said, citing people familiar with the matter.

The move could add to a host of troubles for asset managers, which have often been criticized for exerting undue influence on the management of their portfolio companies.

Lawmakers have also attacked such firms for allegedly prioritizi­ng political motives over financial objectives.

Blackrock, for example, came under fire from Republican­s over its use of environmen­tal, social and governance factors in investing.

The company denied the allegation­s, citing the billions it has invested in energy companies. Its CEO Larry Fink said last year he had stopped using the term "ESG" because it had become too politicize­d.

Blackrock, Vanguard, State Street and FDIC did not immediatel­y respond to Reuters requests for comment on the report outside regular business hours.

The big three asset managers are among the top shareholde­rs at some of the biggest US banks, including Jpmorgan Chase , Bank of America, Wells Fargo and Citigroup.

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