BofA's BlackRock stake grows more appealing

By Elinor Comlay - Analysis

NEW YORK (Reuters) - Bank of America Corp, hoping to repay $45 billion of government money, is less likely to raise the funds by selling its big stake in BlackRock Inc after the asset manager buys Barclays Global Investors, analysts said.

The strategic value of maintaining an about 34 percent stake in what will be by far the world's largest asset manager may persuade embattled Bank of America Chief Executive Kenneth Lewis to hold on to that stake for as long as he can.

"It's a huge chunk of a huge manager," said Nancy Bush, founder of NAB Research LLC. "It would probably be the last deck chair that gets thrown overboard."

The size of the stake, in fact, may make it difficult to find a buyer, analysts said, and Lewis' Bank of America already has other, smaller investment management units on the block that should be easier to sell.

The largest U.S. bank now owns nearly half of BlackRock, which it inherited when it bought Merrill Lynch & Co on Jan 1.

While the Barclays takeover will reduce the bank's percentage stake in BlackRock, the resulting company will be roughly twice as large. BlackRock will have about $2.8 trillion assets under management -- more than the U.S. Federal Reserve. Shares of Bank of America closed up 5.8 percent on Friday.

Bank of America's equity investment in BlackRock contributed $65 million to earnings during the first quarter, according to a filing with regulators.

A Bank of America spokesman declined comment.