Bank of America Corp. has agreed to sell its US$87 billion money-market fund business to BlackRock Inc in one of the cash-management industry’s largest deals ever, Reuters reported.
The deal, whose terms were not disclosed, comes as big banks have faced pressure to simplify their businesses since the global financial crisis.
“This transaction is consistent with Bank of America’s ongoing efforts to simplify its business, in this instance, by outsourcing certain product manufacturing functions to an industry leader,” a Bank of America spokeswoman was quoted as saying.
The profitability of money-market funds, which invest in relatively low-risk corporate and government debt that can be paid back within days or weeks, has been hemmed in by US interest rates hovering near zero.
“Combining our business together with the Bank of America assets and distribution puts us in a unique competitive position,” Tom Callahan, co-head of global cash management at BlackRock, told Reuters.
“It’s a challenge managing cash in a low interest-rate environment, so we have to be highly efficient.”
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