Magazine article American Banker

PNC's Bet on Money Manager Pays Off

Magazine article American Banker

PNC's Bet on Money Manager Pays Off

Article excerpt

When PNC Bank Corp. announced an agreement 10 months ago to buy a leading money manager, danger signs were all over the place.

The money manager, BlackRock Financial Management, was a specialist in bonds in a year of stunning losses in the bond markets.

Furthermore, banks don't have a great reputation for keeping talented money managers. If the veterans left BlackRock, PNC could end up buying an empty shell.

But with the completion of the deal last week for $240 million of cash and notes, PNC appears to have avoided the pitfalls and acquired a healthy, growing enterprise.

"Since we announced (the merger), things have really gone better than we ever hoped," enthused Richard C. Caldwell, chairman of PNC Asset Management Group Inc., the banking company's money management unit.

Which isn't to say that BlackRock had it easy last year. When PNC announced plans to buy BlackRock, the New York-based money manager had $23 billion of fixed-income assets in 70 separately managed institutional portfolios and 24 mutual funds

In 1994, the value of BlackRock's portfolios tanked by about a tenth, Mr. Caldwell said. He attributed the damage to the troubled bond markets. BlackRock, he added, performed admirably, besting its "bogies," or targeted performance benchmarks, by 80 to 120 basis points.

Its strong track record helped BlackRock pick up nearly $6 billion in additional assignments, increasing its total assets under management to $24.3 billion by the time of the acquisition. …

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