BlackRock, the world’s largest asset manager, suffered about $17 billion in losses from its holdings in Russian securities due to the attack on Ukraine.
Clients owned more than $18.2 billion worth of Russian assets at the end of January, according to the company, but market closures and worldwide sanctions imposed following Russian President Vladimir Putin’s invasion of Ukraine made the vast majority of them untradeable, causing BlackRock to sharply reduce their cost.
The firm suspended all purchases of Russian assets on Feb. 28 and said at the time that its country-related assets fell to less than 0.01% of assets under management. A BlackRock spokesperson said that on February 28, when the markets were effectively frozen, the total value was about $1 billion, and the change was due to markdowns, not asset sales.
The destruction of enormous value reflects both the scale of BlackRock — it manages more than $10 trillion in assets — and the damage that the Russian invasion of Ukraine has done to the financial system as a whole.
Other large asset managers also have to write off billions of dollars of risk. Pimco, for example, had at least $1.5 billion in sovereign debt before the war and about $1.1 billion in bets on Russia through the credit default swap market. According to Morningstar, Janus Henderson, Ashmore and Western Assets are also involved in Russian debt.
U.S. banks Goldman Sachs and JPMorgan announced on Thursday plans to pull their businesses out of Russia, saying they were acting in accordance with government instructions.
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Larry Fink, BlackRock’s chief executive, said in a LinkedIn post following the markdown that “this has been a very complex and volatile environment and BlackRock will continue to actively consult with regulators, index providers and other market participants to help our clients exit their positions in Russian securities when and where regulatory and market conditions permit.”
BlackRock declined to provide data on its Russian securities or specify which funds suffered which losses.
But the management company reduced the value of its largest Russian ETF, ERUS, from about $600 million at the end of last year to a total value of less than $1 million. Russia. The fund’s net asset value at the end of January was 622 million euros, but has been reduced to 269 million euros.
If tensions and sanctions ease, Russian securities could trade more freely again and regain some of their value. In this case, BlackRock funds and clients could benefit from a price recovery.