Asset manager BlackRock (BLK) faces a new February 10th deadline over an issue relating to investments in U.S. banks, according to a Bloomberg report.
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The Federal Deposit Insurance Corp. (FDIC) extended the deadline after BLK missed the initial January 10th target date for resolving the issue relating to oversight of the company’s ownership of bank stocks.
Essentially, this relates to how the FDIC should regulate passive investing when an asset manager such as BLK holds a stake of 10% or more in big banks, to ensure companies are not interfering with corporate governance.
BLK Wants More Time
Apparently the regulator had pushed for an earlier deadline after asset manager Vanguard on December 27th agreed to a stricter regime allowing for internal and external audits in cases where it owns more than 10% of a bank regulated by FDIC.
However, BLK was seeking to delay the process until after the new Trump administration takes office, though the U.S. regulator denied a company request to extend the deadline until March 31st.
Sources told Bloomberg the FDIC may commence an investigation into BLK if it doesn’t make enough progress to resolve the issue in time.
Rohit Chopra, member of the FDIC board of directors and director of the Consumer Financial Protection Bureau (CFPB), said steps being taken by the regulator would ensure large asset managers were not “improperly influencing” FDIC-insured banks.
“If these firms are not truly “passive,” they may be in violation of longstanding statutes, including those related to banking,” he said.
If a large asset manager is truly passive as it claims, it should have “no problem” complying with such an agreement, he added.
BLK Earnings Due This Week
The move may overshadow BLK’s Fiscal Q4 earnings release, which is scheduled for Wednesday, January 15th. Management could face analyst questions relating to the deadline extension on the earnings call.
Wall Street analysts expect earnings of $11.32 per share (EPS) on revenues of $5.6 billion. BLK beat earnings estimates last time, with EPS of $11.46 against estimates of $10.45.
Is BLK a Good Stock to Buy Now?
Overall, Wall Street has a Strong Buy consensus rating on BLK stock, based on 12 Buys, one Hold and no Sells. The average BLK price target of $1,152.54 implies roughly 21% upside from current levels. Shares of BLK have increased by 23% in the last year.
