Larry Fink
| Larry Fink | |||
|---|---|---|---|
| File:Larry Fink 1.png | |||
| Born | 2 November 1952 Los Angeles, California, U.S. | ||
| Nationality | US-American | ||
| Occupation | Chairman and CEO, BlackRock | ||
| Party | Democratic | ||
| Religion | Judaism | ||
| Spouse | Lori; three children | ||
Laurence "Larry" Douglas Fink (born 2 November 1952 in Los Angeles, California) is a jewish American businessman and billionaire.
Life
Fink's father Frederick (1925–2013) owned a shoe store and his mother was an English teacher. Fink first studied political science at the University of California in Los Angeles (UCLA) and graduated in 1974 with a bachelor's degree. Also at UCLA and also with distinction followed in 1976 the degree of Master of Business Administration (MBA) specializing in real estate management.
In 1976, Fink joined the investment bank First Boston (later part of the later Credit Suisse). There he developed a new investment product, trading in securitized real estate loans. Such so-called Mortgage Backed Securities (MBS) were soon a sought-after risk security, and later this resulted in far more complex and risky credit derivatives (e.g. CDO, CLO). In 1981, Fink moved up to the next management level at First Boston as a member of the Management Committee and Managing Director. He subsequently became operational head of the Taxable Fixed Income Division. He later built up the Financial Futures and Options Department and most recently headed the Mortgage and Real Estate Products Group. In 1986, Fink was behind a risky bond transaction, which he did not earn as before, but lost around US$ 100 million. He was then released. Precisely because of this experience, Fink developed an effective risk management system based on interdisciplinary approaches.
In 1988, Fink founded the financial service provider Blackstone Financial Management with seven partners (including Robert Kapito). Initially a subsidiary of the investment company Blackstone, the company became independent in 1994. In 1995, PNC Financial Services bought BlackRock and listed it on the New York Stock Exchange in 1999 under the name BlackRock Inc. Fink built the company as Chairman and Chief Executive Officer (CEO) and has held those roles ever since.
Fink's basic business idea was to check products from investment banks and investment offers for institutional customers and to provide an independent expert opinion as well as to manage pensions. It was characteristic that BlackRock's development went largely unnoticed by the public and that Fink was never one of the dazzling "gurus" in the industry. For the growth to a significant size in the financial sector, a test order for General Electric was received in 1994, which was highly regarded by experts. For example, BlackRock examined and "cleaned up" (FTD, May 25, 2011) the troubled mortgage portfolio of the bank subsidiary Kidder-Peabody for the conglomerate. The specific "Aladdin" data analysis system, a combination of 5,000 mainframes in four data centers, became groundbreaking for the quality standards. This system could eventually perform 200 million calculations per week; Fink once compared "Aladdin" to an MRI scanner for investment portfolios.
Since BlackRock was one of the best experts on securitized mortgage transactions, the company's advice was particularly in demand after the outbreak of the financial market crisis from mid-2007. This was due to the bursting of the bubble in the US real estate market, as a result of which the derivatives, which were now issued by countless providers, fell in value and tore the financial markets industry down – BlackRock did not have such "toxic" securities on its books to any great extent. In March 2008, the New York Federal Reserve commissioned BlackRock to analyze the distressed portfolio of the troubled investment bank Bear Stearns. A little later, the US government transferred the failed investment portfolio of the insurance group AIG to Fink's company. Basically, BlackRock was involved in all major government bailouts (cf. ZEIT, May 5, 2011).
Even before the outbreak of the financial market crisis, Fink had also built up a second pillar in asset management. The first step was the takeover of Merrill Lynch's asset management business at the end of 2006 in the Merrill Lynch Investment Managers unit. In December 2009, BlackRock bought the asset management of the British bank Barclays in its subsidiary BGI for US$ 13.5 billion (partly in cash, partly in shares), which not least gained a customer base outside the USA. This also included the iShares division with exchange-traded funds (ETF; index funds) traded on the stock exchange. Barclays sold its 20% stake in BlackRock, which it had received as part of the deal, in mid-2012.
The rise of Fink's BlackRock symbolized the shift in power on Wall Street from the sell side (providers of investment vehicles such as investment banks) to the buy side (buyers of financial products such as mutual funds). Another sign of this shift in power was BlackRock’s takeover of the financial fund division of the US money house Bank of America in 2015 with a volume of US$ 87 billion. However, unlike investment bankers, BlackRock never bought on its own account to avoid betting against its own clients. However, it has been noted by critics that conflicts of interest may exist between the analysis division and the investment division. Last but not least, this concerned the difficult to monitor insider knowledge regarding the assets managed on behalf of the government since the financial crisis. In this context, however, Fink emphasized that the state had always come out of the rescue operations with a profit, since bad business in the short term could develop into good business in the long term (cf. FAS, September 9, 2012).
The assets under management of BlackRock grew exorbitantly in the 2010s and amounted to more than US$ 6 trillion at the end of 2019, the larger part of which – also with regard to BlackRock's clientele, which consists e.g. made up of pension funds – was invested for the long term and in a risk-averse manner. BlackRock was thus the largest fund company in the world. With acquisitions, for example of the US company Future Advisors, which specializes in investment robots, in 2015, BlackRock had successively expanded its already great expertise in the field of automated financial management. Fink himself was soon considered the "most powerful man on Wall Street" in insider circles (SZ, January 18, 2018). Forbes magazine ranked him 28th among the most influential people in the world in 2018.
In 2018, BackRock's sales – with an after-tax profit of US$ 4.3 billion – were around US$ 14.2 billion. The number of employees worldwide was around 15,000 in the same year. In Germany, BlackRock held significant shares in the vast majority of the 30 Dax companies until 2019; When the German energy group Innogy went public in 2017, the financial manager jumped in as the second largest shareholder with 4.7%.
Due to the rapidly growing fiduciary assets and the offensive marketing of index funds (ETFs), BlackRock was increasingly portrayed in the media as a threat to the global financial and economic system. Fink, who has good connections in US politics and was at times considered a candidate for the post of US Treasury Secretary – in the event that the ultimately defeated Democratic presidential candidate Hillary Clinton won the election – always emphasized that his influence was merely investor of outside capital is limited (cf. e.g. FAZ, 1.11.2018). Fink's annual circulars to the CEOs of large international corporations in which BlackRock held shares received a lot of media attention. So he advertised i.a. for state support for long-term investment strategies or the promotion of sustainable forms of investment. From 2018 onward, Fink also increasingly pushed for the creation of funds in-house that took climate protection into account, and advertised the same aggressively, sometimes with support from European politicians (cf. Hbl., 27 September 2018).
The financial manager came into the focus of the German public when Friedrich Merz announced his (later unsuccessful) candidacy for the CDU federal presidency in October 2018 and gave up his position as chairman of the supervisory board of BlackRock Germany, which he had held since March 2016. A little later, the Cologne public prosecutor's office raided the group's German headquarters in Munich on suspicion of illegal so-called cum-ex deals. This led to critical press, in which BlackRock's immense and hardly state-controlled economic and political influence was pointed out. Fink reacted with an open letter published on the Internet, in which he presented his company as a responsible "custodian of the savings of many millions of people worldwide".
In 1988, he co-founded BlackRock, of which he has been Chairman since 1998. With over Fed$10 trillion in assets under management as of March 2022, BlackRock is the world's largest wealth manager. Fink is also a member of the Board of Trustees of the World Economic Forum.
Honors (as of 2022)
- 2005, World's Best CEOs (Barron's)
- 2007, Golden Plate Award of the American Academy of Achievement
- 2010, Woodrow Wilson Award
- 2015, Appeal of Conscience Award
- 2015, Americas Society Gold Medal
- 2016, UCLA Medal
- 2016, ABANA Achievement Award
- 2019, Charles Schwab Financial Innovation Award
Memberships
New York University Board of Trustees; Board of Trustees of the Medical Center at New York University; Board of Trustees of the Museum of Modern Art (MoMA).
Family
Fink, who i.a. owns a farm in North Salem, New York, is married and has three children. He loves hiking and fly fishing. Fink is an active supporter of the Democratic Party.