BOSTON (Reuters) - America's three biggest banks have asked BlackRock Inc. <BLK.N> to act as the lead asset manager for a $75 billion fund they are creating to support the asset-backed securities market, a source said on Wednesday.
By Svea Herbst-Bayliss
BOSTON (Reuters) - America's three biggest banks have asked BlackRock Inc. <BLK.N> to act as the lead asset manager for a $75 billion fund they are creating to support the asset-backed securities market, a source said on Wednesday.
BlackRock, the largest publicly traded U.S. money manager that has long been praised for its expertise in fixed income markets, is the leading candidate for the position, said the source, who is familiar with the matter, but not authorized to speak about it publicly.
Nothing has been announced by the banks and final negotiations are continuing, the source added.
!ADVERTISEMENT!A BlackRock spokesman declined to comment.
The announcement could come as early as next week.
Bank of America <BAC.N>, Citigroup <C.N> and JPMorgan Chase <JPM.N> are heading a large-scale effort to raise billions of dollars for the new fund that is supposed to help structured investment vehicles sell hard-to-value paper they hold without further unnerving already jittery credit markets.
Critics of the fund have said it amounts to a bailout for players who made bad business decisions when setting up the structured investment vehicles known as SIVs. Supporters say it is necessary to keep credit markets, which have been nervous for months, from suffering more shocks.
SIVs' have been stocked with bank debt and asset-backed securities whose value has fallen sharply as fears about the subprime mortgage crisis spread in the last months.
The lead manager for the new fund, known as the master liquidity enhancement conduit, or M-LEC, would be in charge of deciding what to do with the assets sold into the portfolio.
BlackRock has grown dramatically in recent years, transforming itself into a global investment management firm with $1.3 trillion in assets from a small bond shop. It offers risk management and advisory services through BlackRock Solutions.
While the company usually likes to keep a relatively low profile, its founder, Laurence Fink, put it in the spotlight recently when he was rumored to have been tapped to head Merrill Lynch <MER.N>. Merrill Lynch, along with other Wall Street powerhouses, suffered billions of dollars in losses due to losses on mortgage securities.
The fund, like all funds, would also need a custodian and several prominent firms have been mentioned as possible candidates.
A spokesman for Bank of New York Mellon, one of the biggest U.S. custodians, declined to comment.
(Additional reporting by Jonathan Stempel, editing by Leslie Gevirtz)
