Andrew S. Baer, Esq. 

Sullivan & Cromwell LLP 

BOARD OF' GOVERNORS 

OF'THE 

FEDERAL RESERVE SYSTEM 

WASHINGTON, D. C. 20551 

December 15,2009 

1701 Pennsylvania Avenue, N.W. 

Washington, DC 20006-5805 

Dear Mr. Baer: 

SCOTT G. ALVAREZ 

GENERAL COUNSEL 

This responds to your request for confirmation that Barclays PLC ("Barclays"), 

London~ United Kingdom, would not be deemed to control BlackRock, Inc. 

("BlackRock"), New York, New York, or any of its subsidiaries, for purposes of the 

Bank Holding Company Act ("BHC Act") as a result of Barclays's equity investment in, 

and business relationships with, BlackRock.l Barclays is a foreign bank and a financial 

holding company for Pll!Poses of the BHC Act. BlackRock is an investment banking and 

asset management firm? 

Transaction Summary 

BlackRock has acquired all the outstanding equity of Barc1ays Global Investors 

("BOI"), San Francisco, California, from Barclays, in exchange for 37.8 million common 

and preferred shares of BlackRock and approximately $6.6\pillion in cash. BGl engages 

in investment advisory and asset management services. As a result of the transaction, 

Barclays owns approximately 4.9 percent of the voting shares, and 19.9 percent of the 

total equity, of BlackRock. The preferred shares that Barclays received are nonvoting 

shares that convert automatically into common stock, on a one-for-one basis, on sale to a 

third party. The shares cannot convert into voting shares in Barclays' hands at any time. 

1 Correspondence related to this request includes documents of June 8, June 16, June 24, 

September 4, and November 25,2009, as well as other communications with Board staff 

in person, by telephone, and by electronic luail. 

2 BlackRock is a subsidiary of both The PNC Financial Services Group, Inc. ("PNC"), 

Pittsburgh, Pennsylvania, and Bank of American Corporation ("BAC"), Charlotte, North 

Carolina. PNC owns 32.5 percent of the voting shares, and approximately 23.8 percent 

of the total equity, of Black Rock. PNC may participate in a planned capital raise by 

BlackRock which could increase its ownership interest. Bank of America Corporation 

owns 3.4 percent of the voting shares, and approximately 34.1 percent of the total equity, 

of BlackRock. 
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However, ifBarclays sold all of its conunon and preferred shares, it would ultimately 

control the disposition of38.6 percent of the common stock of BlackRock. 

As part of the transaction, Barclays has entered into a shareholder's agreement 

with BlackRock.3 The shareholder agreement limits Barclays' ownership of BlackRock 

stock to a maximum of 4.9 percent of the voting power of all issued and outstanding 

voting stock, and 19.9 percent of BlackRock's total equity. 

Under the shareholder's agreement, Barclays has the authority to nominate two of 

nineteen members ofBlackRock's board of directors.4 The agreement requires Barclays 

to vote all of its shares of BlackRock in accordance with the recommendations of 

BlackRock's board, althou~h certain corporate actions of BlackRock would require the 

prior approval of Bar clays. The agreement provides certain pre-emptive, demand 

registration, and "piggyback" registration rights to Barclays. The shareholder's 

agreement generally prohibits Barclays from direct or indirect involvement in making or 

soliciting proposals that would cause it to exceed any part of its ownership cap or its 

allotted board representation, or for any type of transaction involving a merger, 

consolidation, restructuring or sale of BlackRock, or other significant corporate 

transaction concerning BlackRock. 

Under the terms of the agreement, Barclays would not be able to sell or otherwise 

transfer any BlackRock stock to third parties for a period of one year from 

December 1,2009, without the prior approval ofBlackRock. For the one-year period 

beginning December 1,2010, Barclays may transfer 50 percent of its shares without 

BlackRock's consent and the other 50 percent with such consent In any case where 

Barclays is peImitted to transfer its shares to a third party, 6 Barclays may only transfer 

BlackRock shares in: (a) certain private placement sales prior to the registration of the 

3 The agreement expires on the later to occur of either (i) the fifth anniversary of the 

closing of the transaction or (ii) the time when Barclays' ownership interest in 

BlackRock's total equity drops below 5 percent of the outstanding capital stock. 

4 Barclay's representation on BlackRock's board may be reduced to one director if 

Barclays' ownership of Black Rock stock is below 10 percent for a period of more than 

90 days, and reduced to no directors if its ownership of BlackRock stock is below 

5 percent for such period. 

S Such actions include: (i) any amendment, modification, repeal or waiver of 

BlackRock's certificate of incorporation or bylaws that would in any material respect 

adversely alter or change the powers or preferences of the shares of any class of 

BlackRock's stock held by Barclays; (ii) any settlement or consent in a regulatory 

enforcement matter that reasonably would be 1ikely to have adverse consequences for 

Barclays; or (iii) any voluntary bankruptcy or similar filing by BlackRock. 

6 The shareholder agreement also permits Barclays to transfer shares to affiliates who 

agree to be bound by the terms of the shareholder's agreement. Since such affiliates 

would not be considered a third party, any nonvoting shares transferred to an affiliate 

would remain nonvoting in the affiliate's hands. 
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shares to persons who would not acquire more than 2 percent of BlackRock' s voting 

stock in such sales; (b) transfers that do not result in any person acquiring more than 

2 percent ofBlackRock's voting stock and to which a majority ofBlackRock's 

independent directors have consented in writing; (c) privately negotiated transactions 

pursuant to which (i) no person would acquire more than 2 percent of BlackRock's voting 

stock in such transfer, (ii) no person would (taking the transfer into account) own 

5 percent or more of BlackRock's voting stock, and (iii) not more than 4.5 percent of 

BlackRock's capital stock would be sold in any quarter (which limit also must take into 

account other sales by Barclays in the same calendar quarter); or (d) in widespread public 

distributions, provided that in such widespread distribution (i) no more than 4.5 percent 

ofBlackRock's capital stock (taking the transfer into account) is sold per calendar quarter 

in total across all types of sales, and (ii) Barclays does not knowingly sell more than 

2 percent of BlackRock' s voting stock to any person or any voting stock to any person 

who would, following the sale, own 5 percent or more of BlackRock's voting stock. In 

addition, Barclays is required to coordinate with BlackRock on any transfer involving 

more than 10 percent of BlackRock's voting stock (including the effects of the transfer). 

The shareholder's agreement grants BlackRock a right, substantially similar to a right of 

first refusal, to purchase any of its shares that Barclays proposes to sell through any such 

permissible transfer.7 

Barclays has acquired a 51 percent participation in a 364-day, $2 billion revolving 

bridge facility to BlackRock to finance its acquisition of BGI. The facility is not 

renewable and contains no prepayment penalties. In addition, Barclays engages in, and 

wishes to engage in the future, in other business relationships with both BGI and 

BlackRock. Such relationships include, but would not be limited to, securities 

underwriting, brokerage and trading, mergers and acquisitions advisory services, and 

investment management services in the United States, Europe and Asia. Barclays 

received approximately $38 million in compensation for such services for the first three 

quarters of 2009, representing less than 1 percent of Barclay's projected total annual 

revenues for 2009. BlackRock and BGI received approximately $108 million for their 

services to Barc]ays, representing less than 2 percent of BlackRock's projected total 

annual revenues for 2009. Barclays and Blackrock will limit all business transactions 

with each other to non-exclusive, anns-Iength transactions in the ordinary course of 

business that, in the aggregate, do not generate in excess of 2.5 percent of the 

consolidated annual gross revenues of either Barclays or BlackRock, calculated on a 

rolling average of the prior four quarters. 

Barclays has stated that it does not propose to control or exercise a controlling 

influence over BlackRock and that its investment is a passive investment. Accordingly, 

Barclays has provided commitments substantially similar to those on which the Board has 

7 The stockholder agreement provides that if Barclays agrees to sell or otherwise transfer 

any stock in BlackRock pursuant to a privately negotiated transaction, Barclays must 

inform BlackRock of the terms negotiated with the proposed purchaser (which must be a 

bona fide third party purchaser) and give BlackRock the right to purchase the shares that 

are proposed to be sold on the disclosed tenns. 
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previously relied in determining that an investing bank holding company would not be 

able to exercise a controlling influence over a nonbanking organization for purposes of 

theBHCAct. 

Legal Framework 

For purposes of the BHC Act, a company has control over another company if the 

first company (i) directly or indirectly or acting through one or more other persons owns, 

controls, or has power to vote 25 percent or more of any class of voting securities of the 

other company; (ii) controls in any manner the election of a majority of the directors of 

the other company; or (iii) directly or indirectlI exercises a controlling influence over the 

management or policies of the other company. The Board's Regulation Y also sets forth 

a set of rebuttable presumptions of contro1.9 

As a result of the transaction, Barclays would be deemed to control BlackRock for 

purposes of the BHC Act only if the Board were to find that Barclays exercised a 

controlling influence over the management or policies ofBlackRock. Barclays does not 

own, control, or hold with power to vote 25 percent or more of any class of voting 

securities of, or control the election of a majority of the directors of, BlackRock. In 

addition, Barclays does not trigger any of the rebuttable presumptions of control in 

Regulation Y with respect to BlackRock as a result of the transactions. 

Discussion and Analysis 

The size and nature of the equity investment by Barclays in BlackRock, when 

combined with Barclays's representation on BlackRock's board of directors and its 

existing and proposed business relationships with BlackRock, raise the issue of whether 

Barclays would exercise a controlling influence over the management or policies of 

BlackRock. 

Director Representation. In September 2008, the Board revised its policy 

statement regarding equity investments in banks, bank holding companies, and 

nonbanking fmns. 10 In its revised statement, the Board noted that a minority investor 

generally should be able to have a single representative on the board of directors of a 

nonbanking organization without acquiring a controlling influence over that 

organization's management or policies. The Board also stated that a minority investor 

that has up to two representatives on the board of directors of a non banking organization 

would be unlikely, absent other indicia of control, to be able,to exercise a controlling 

interest when (i) the investor's aggregate director representation is proportionate to its 

total interest in the organization but does not exceed 25 percent of the voting members of 

the board, and (ii) another shareholder is a bank holding company that controls the 

organization under the BHe Act. 

8 12 U.S.C. § 1841(a)(2); 12 CFR 225.2(e). 

9 See 12 CFR225.31(d). 

10 12 CFR 225.144 ("Policy Statement"). 
-5-

Barclays will have two representatives on BlackRock's board of directors, which 

would expand from 17 to 19 directors. Barclays' aggregate director representation is 

proportionate to the total interest in the organization and does not exceed 25 percent of 

the voting members of the Board. In addition, both PNC and BAC control BlackRock for 

purposes of the BHC Act and are bank holding companies. Accordingly, Barclay's 

proposed director representation conforms to the Policy Statement. 

Transfer and Conversion of Nonvoting Shares. The Board's Policy Statement 

also states that nonvoting shares that are convertible into voting shares carry less 

influence when such shares may not be converted into voting shares in the hands of the 

investor and may only be transferred by the investor: (i) to an affiliate of the investor or 

to the nonbanking organization; (ii) in a widespread public distribution; (iii) in transfers 

in which no transferee (or group of associated transferees) would receive 2 percent or 

more of any class of voting securities of the nonbanking organization; or (iv) to a 

transferee that would control more than 50 percent of the voting securities of the 

nonbanking organization without any transfer from the investor. 

The nonvoting convertible preferred shares that Barclays holds may not be 

converted in Barclay's hands. In addition, as noted above, the shareholder's agreement 

limits Barclay's ability to transfer those shares to third parties to methods that are 

consistent with the Policy Statement. Accordingly, the transfer restrictions effectively 

limit the influence over BlackRock that such shares might otherwise confer on Barclays. 

The Board also noted in the Policy Statement that it would not expect that a 

minority investor would have a controlling influence over a nonbanking organization if 

the investor owns a combination of voting shares and nonvoting shares that, when 

aggregated, represent less than one-third of the total equity of the organization (and less 

than one-third of any class of voting securities, assuming conversion of all convertible 

nonvoting shares held by the investor) and does not allow the investor to own, hold, or 

vote 15 percent or more of any class of voting securities of the organization. 

In this case, Barclays owns, holds, or has the power to vote less than 15 percent of 

Blackrock's only class of voting securities, and owns less than one-third of the total 

equity of the organization. However, Barclays would receive nonvoting shares that, upon 

sale and conversion, could represent as much as 38.6 percent of Black Rock's currently 

outstanding common stock. To address this issue, Barclays has committed that it will not 

sell or transfer any shares of BlackRock stock to an unaffiliated third party if, as a result 

of the transfer, Barclays would have transferred ownership or control of an aggregate of 

33.3 percent or more of BlackRock voting stock. I I The numerator for calculating the 

aggregate percentage reflects all shares that Barclays currently owns or controls, or that it 

may in the future own or control, as well as all shares of nonvoting stock that it may 

] 1 Any shares in excess of 33.3 percent that Barclays may not transfer as a result of this 

commitment will be held by Barclays without the possibility of transfer and will remain 

nonvoting in Barclays' hands. 
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propose to transfer, and the denominator incorporates all of BlackRock's outstanding 

common stock as well as all nonvoting convertible preferred stock held by Barclays at the 

time of the proposed transfer. The commitment itself prohibits Barclays from violating 

the Policy Statement and prevents Barclays from being able to transfer shares in excess of 

this percentage. Because the preferred shares held by Barclays convert automatically on 

transfer, any sale by Barclays would increase the denominator, preventing it from diluting 

its ownership in a manner that would circumvent the Policy Statement. 

Business Transactions. Barclays is engaged in various business relationships with 

BlackRock, including a 51 percent participation interest in a 364-day, $2 billion 

revolving bridge facility for BlackRock's acquisition ofBGl. The facility is not 

renewable and contains no prepayment penalties. In addition, Barc1ays engages, and 

wishes to engage in the future, in business relationships with both BGI and BlackRock 

subsequent to the consummation of the transaction. Such relationships include, but 

would not be limited to, securities underwriting, brokerage and trading, mergers and 

acquisitions advisory services, and investment management services in the United States, 

Europe and Asia. 

The Board typically has been concerned that a bank holding company has 

acquired control of a nonbanking organization for BHC Act purposes if the company has 

invested in the organization and has significant business relationships with the 

organization.12 To address this concern, Barclays has agreed to limit the amount of 

business relationships with BlackRock and has committ~d that all such transactions will 

be non-exclusive, arms-length transactions in the ordinary course of business. Under the 

commitments, the aggregate amount of gross revenues that Barclays and BlackRock, 

each on a censolidated basis, respectively earns from such business transactions will not 

exceed 2.5 percent of their respective consolidated gross revenue, calculated on a rolling 

basis over the prior four quarters. The commitment accounts for the current level of 

business transactions being conducted by Barclays and BlackRock with each other and 

limits the extent that Barclays or BlackRock can influence the other through future 

business dealings. 

Other mitigating factors further constrain the ability of Barclays to exercise a 

controlling influence over the management and policies of BlackRock and support a 

characterization of Barclay's proposed relationship with BlackRock as noncontrolling. 

In particular, Barclays owns less than 5 percent of the outstanding voting shares of 

BlackRock, and PNC and BAC have significantly larger equity ownership interests and 

are deemed to control BlackRock for purposes of the BHC Act. 

Based on all the facts of record in this case, staff would not at this time 

recommend that the Board frod that Barclays exercises a controlling influence over the 

management or policies ofBlackRock for purposes of the BHC Act. In reaching this 

12 See, ~ letter dated February 6, 2003, from Robert deY. Frierson, Deputy Secretary 

of the Board, to H. Rodgin Cohen; letter dated April 30, 1986, from James McAfee, 

Associate Secretary of the Board, to Thomas M. Shoaff. 
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determination, staff relied on all the facts of record, including all the representations and 

commitments made by or on behalf of Barclays and BlackRock (whether noted in this 

letter or otherwise contained in your correspondence with the Board). Any change in the 

terms or circwnstances of the transaction may result in a different decision. In this 

regardt you should advise staff immediately of any material changes in the facts noted 

above. 

To address the possibility of a controlling influence developing in the future, the 

Board retains the authority to review the investment and relationships regularly to 

detennine whether, under all the facts and circumstances, Barclays is acting in a manner 

that suggests it has a controlling influence over BlackRock for purposes of the BHe Act. 

If you have any questions about this mattert please contact Brian P. Knestout, Attorney 

(202-452-2249), or Pat Robinson, Assistant General Counsel (202-452-3005), of the 

Board's Legal Division. 

Sincerely, 
-8-

APPENDIX 

Barclays and its subsidiaries and affiliates (collectively, the "Barclays Group"), will not, 

without the prior approval of the Board or its staff, directly or indirectly: 

1. Exercise or attempt to exercise a controlling influence over the management or 

policies of BlackRock or any of its subsidiaries; 

2. Have or seek to have more than two representatives of the Barclays Group serve on 

the board of directors ofBlackRock or any of its subsidiaries; 

3. Permit any representative of the Barclays Group who serves on the board of directors 

of BlackRock or any of its subsidiaries to serve (i) as the chairman of the board of 

directors of BlackRock or any of its subsidiaries, (ii) as the chairman of any 

committee of the board of directors of BlackRock or any of its subsidiaries, or 

(iii) serve as a member of any committee of the board of directors of BlackRock or 

any of its subsidiaries if Barclays Group representatives occupy more than 25 percent 

of the seats on the committee; 

4. Have or seek to have any employee or representative oftbe Barclays Group serve as 

an officer, agent, or employee of BlackRock or any of its subsidiaries; 

5. Take any action that would cause BlackRock or any of its subsidiaries to become a 

subsidiary of Barclays; 

6. Own, control, or hold with power to vote securities that (when aggregated with 

securities that the officers and directors of the Barclays Group own, control, or hold 

with power to vote) represent 25 percent or more of any class of voting securities of 

BlackRock or any of its subsidiaries; 

7. Own or control equity interests that would result in the combined voting and 

nonvoting equity interests of the Barclays Group and its officers and directors to 

equal or exceed 25 percent of the total equity capital ofBlackRock or any of its 

subsidiaries in the event that the Barclays Group were to own, hold, or have the 

power to vote 15 percent or more of the outstanding shares of any class of voting 

securities of BlackRock. 

8. Propose a director or slate of directors in opposition to a nominee or slate of 

nominees proposed by the management or board of directors of BlackRock or any of 

its subsidiaries; 

9. Enter into any agreement with BlackRock or any of its subsidiaries that substantially 

limits the discretion of BlackRock's management over major policies and decisions, 

including, but not limited to, policies or decisions about employing and compensating 

executive officers; engaging in new business lines; raising additional debt or equity 

capital; merging or consolidating with another firm; or acquiring, selling, leasing, 

transferring, or disposing of material assets, subsidiaries, or other entities; 
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10. Solicit or participate in soliciting proxies with respect to any matter presented to the 

shareholders ofBlackRock or any of its subsidiaries; 

11. Dispose or threaten to dispose (explicitly or implicitly) of equity interests of 

BlackRock or any of its subsidiaries in any manner as a condition or inducement of 

specific action or non-action by BlackRock or any of its subsidiaries; or 

12. After the closing date of the Transaction,13 sell or transfer any shares of capital stock 

of BlackRock to an unaffiliated third party if, as a result of the transfer, Barclays 

would have transferred in the aggregate, since the closing date of the Transaction, 

ownership or control of33.3 percent or more ofBlackRock's voting stock. The 

above percentage shall be calculated using the following formula: 

(i) The numerator, which will be the total number of shares of BlackRock stock 

(common and convertible preferred) owned or controlled by Barclays as of 

immediately prior to the closing of the Transaction, acquired by Barclays in the 

Transaction or subsequently acquired or controlled by Barclays, that Barclays has 

at or following the closing sold or transferred to unaffiliated third parties, plus the 

number of such shares that Barclays proposes to sell or transfer, 14 

divided by: 

(ii) the denominator, which will he the total number of shares of BlackRock 

common stock outstanding at the time of the proposed transfer plus the number of 

shares of Black Rock convertible preferred stock owned or controlled by Barclays 

at the time of the proposed transfer. 

This commitment applies only to shares of BlackRock that Barclays is deemed to 

own or control for purposes of the Bank Holding Company Act of 1956, as 

amended. 

13. Enter into any other banking or nonbanking transactions with BlackRock or any of 

its subsidiaries, except for transactions in the ordinary course of business that are 

non-exclusive (except to the extent any individual transaction may contain an 

exclusivity provision limited to that transaction) and are on terms and under 

circumstances that in good faith would be offered to, or would apply to, companies 

that are not affiliated with Barclays or BlackRock, including, hut not limited to, 

securities underwriting, brokerage and trading, mergers and acquisitions advisory 

services and investment management services, provided that the aggregate balance 

of all deposit accounts held by Barclays at BlackRock and its subsidiaries does not 

exceed I percent of the total deposits held at BlackRock and its subsidiaries and that 

13 For purposes of these commitments, the "Transaction" is the sale by Barclays of its 

Barclays Global Investors asset management business to BlackRock, which is 

expected to close on December 1, 2009. 

14 The share figures used in the numerator will be adjusted for any stock splits, 

reverse stock splits, or other similar transactions occurring after the closing date of 

the Transaction. 
- 10-

the aggregate amount of (i) gross revenues Barclays, on a consolidated basis, earns 

from BlackRock and its subsidiaries from its business transactions with them does 

not exceed 2.5 percent of Barclays' annual gross revenues, on a consolidated basis, 

and (ii) gross revenues BlackRock, on a consolidated basis, earns from the Barclays 

Group from its business transactions with it does not exceed 2.5 percent of 

BlackRock's annual gross revenues, on a consolidated basis, in each case under 

(i) and (ii) as calculated based on the rolling average ofllie prior four quarters, as 

adjusted for the Transaction. 

Barclays will use BlackRock's public filings to determine BlackRock's gross 

revenues on a rolling four-quarter basis. Barclays will use all infonnation available 

to Barclays to monitor the amount ofBlackRock's revenues earned from Barclays 

(as described in (ii) above), and will take all steps as are necessary and within its 

power to keep those revenues from exceeding the 2.5 percent cap. 

For purposes of this commitment, "revenue" means all monies Barclays or 

BlackRock receive directly from the other in exchange for their respective products 

or services and that are accounted for by the recipient as revenue under applicable 

accounting standards. 

The tenns used in these commitments have the same meanings as set forth in the Bank 

Holding Company Act of 1956, as amended ("BHC Acf'), and the Board's Regulation Y. 

Barclays understands that these commitments constitute conditions imposed in writing in 

connection with the Board's determination that as a result of the Transaction Barclays 

will not control BlackRock for purposes of the BHC Act and Regulation Y, and as such, 

may be enforced in proceedings under applicable law.