Photo: Bloomberg TV
BlackRock, the largest money management firm in the world, may be forced to stop doing business with certain Wall Street banks if the Moody’s indeed lets the axe fall and downgrades the banks, the firm’s CEO Larry Fink said in an interview with DealBook.Although Fink did not specify which banks he meant, the possibility of even less business amid rocky economic conditions is not good news for banks. A Moody’s downgrade would force banks to put up increased collateral to its counterparties and affect investor conference.
Fink noted that he doesn’t want to take away business and possible revenue from some of the banks, but that contractual obligations with BlackRock’s business partners requires they do business with companies that have squeaky clean credit ratings. He even said that he didn’t understand Moody’s thinking behind the downgrades.
In February, Moody’s announced a possible downgrade of 17 of the largest banks around the world, warning of up to a 3 notch downgrade for some banks such as Morgan Stanley, Credit Suisse and UBS. Moody’s is expected to make the decision of whether to downgrade the banks in June, according to the WSJ.