Bank of America to Sell $87 Billion Money-Market Fund Business to BlackRock
By Sarah Krouse and Christina Rexrode
Bank of America Corp. agreed to sell its $87 billion money-market fund business to BlackRock Inc., a deal that comes as both asset managers and banks grapple with low interest rates and changing regulations. BlackRock will manage the assets, which include money-market funds, separate accounts and other cash management products, and Bank of America will continue to do distribution. The deal, expected to close in the first half of next year, will boost BlackRock’s cash management platform to more than $370 billion of assets under management. Firms offering money-market funds have waived some or all of their fees in recent years amid a prolonged period of low interest rates. “It’s a highly problematic business under current low rates”, said Karen Petrou, managing partner at Washington, D.C.-based consulting firm Federal Financial Analytics Inc. She added that cash management businesses are likely to be beneficial for fund managers longer term, but that large banks offering those services are subject to additional layers of regulations.