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purposes of the BHC Act. If you have any questions about this matter, please
contact Brian P. Knestout, Senior Attorney (202-452-2249), or Christopher M.
Paridon, Counsel (202-452-3274), of the Board’s Legal Division.

Sincerely,

at 4, ral


BOARD OF GOVERNORS

OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, 0. C. 20551

December 30, 2011

Robert L. Tortoriello, Esq.

Cleary, Gottlieb, Steen & Hamilton LLP
One Liberty Plaza

New York, New York 10006-1470

Dear Mr. Tortoriello:

This responds to your request for confirmation that Bank of America, Inc.
(“BAC”), Charlotte, North Carolina, would no longer be deemed to control
BlackRock, Inc. (“BlackRock”), New York, New York, or any of its subsidiaries,
for purposes of the Bank Holding Company Act of 1956, as amended (“BHC
Act”), as a result of BAC’s substantial divestiture of its equity investment in, and
changes to its business relationships with, BlackRock.’ BAC is a financial holding
company for purposes of the BHC Act. BlackRock is an investment banking and
asset management firm.

Background

BAC acquired all the outstanding shares of Merrill Lynch & Co., Inc.
(“Merrill”), New York, New York, on January 1, 2009. As a result of this
transaction, BAC also acquired Merrill’s ownership interest in BlackRock, and
rights and obligations with respect to BlackRock, including the contractual ability
to nominate two directors to BlackRock’s board of directors. BAC and
BlackRock also engaged, and continue to engage, in various business relationships
described below.

' Correspondence related to this request includes your letter dated April 21, 2011,
to Scott G. Alvarez, as well as other communications with Board staff in person,
by telephone, and by e-mail.

> BlackRock is a subsidiary of The PNC Financial Services Group, Inc. (“PNC”),
Pittsburgh, Pennsylvania. PNC owns 23.9 percent of the voting shares, and
approximately 21.0 percent of the total equity, of BlackRock.


In connection with acquiring control of Merrill, BAC assumed certain
existing contractual agreements between Merrill and BlackRock. Pursuant to a
Dual Employee Agreement, a wholly owned subsidiary of BAC, Bank of America,
N.A. (“BANA”), Charlotte, North Carolina, and BlackRock investment
Management, New York, New York, an investment management subsidiary of
BlackRock, have approximately 40 dual employees who facilitate the provision of
investment management services to fiduciary customers of BANA’s trust division.
Pursuant to a Global Distribution Agreement (“Distribution Agreement”), Merrill
must distribute BlackRock products on at least the same economic terms as any
other product offered or distributed by Merrill Lynch. BAC proposes to retain
these relationships. In addition, BAC engages, and wishes to engage in the future,
in other business relationships with BlackRock on an arms-length basis, including
but not limited to investment management and advisory services, fund
administration, securities borrowing and lending, and portfolio management and
analysis.

BAC’s ownership interest in and rights with respect to BlackRock have
been reduced through a series of subsequent transactions. As a result, BAC,
directly or indirectly, now owns, controls, and holds with power to vote less than 1
percent of the voting and total equity of BlackRock. BAC no longer has a right to
director representation on the board of BlackRock, and BAC’s current
representative on Blackrock’s board will not stand for reelection. BAC has stated
that it does not propose to control or exercise a controlling influence over
BlackRock and that, given the reduction of its investment and de minimis business
relationships, its interest is BlackRock is passive.

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
indirectly 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 control.’ The BHC Act and the Board’s Regulation Y presume
that any company that directly or indirectly owns, controls, or has the power to

3 12 U.S.C. § 1841(a)(2); 12 CFR 225.2(e).
* See 12 CFR 225.31(d).


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vote less than 5 percent of any class of voting securities of a bank or other
company does not control the bank or other company.”

The Board previously has found that a company that controlled another
company for a significant period may be able to exert a controlling influence over
the company even after a substantial divestiture. As a result, the Board generally
has required that the controlling company divest below five percent of the voting
equity of the company to establish that it has relinquished its control position.®

BAC has divested or otherwise reduced its investment to below five percent
of the voting shares and total equity of BlackRock, and BAC’s relationship with
BlackRock would not trigger any of the rebuttable presumptions of control in the
BHC Act or the Board’s Regulation Y. In addition, the investment would conform
to the Board’s policy statement on equity investments in banks and bank holding
companies.’ Notably, another entity has a significantly larger voting and equity
ownership interest in BlackRock and is considered 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 find that BAC controls BlackRock for purposes of the
BHC Act. In reaching this determination, staff relied on all the facts of record,
including all the representations made by or on behalf of BAC and BlackRock,
whether noted in this letter or otherwise contained in your correspondence with the
Board. Any change in the terms or circumstances of the transaction may result in
a different opinion. In this regard, 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 determine whether, under all the facts and circumstances, BAC is
acting in a manner that suggests it has a controlling influence over BlackRock for

5 See 12 U.S.C. § 1841(a)(3), 12 CFR 225.31(e).

® See “Statement of policy concerning divestitures by bank holding companies,”
12 CFR 225.138.

7 See “Policy statement on equity investments in banks and bank holding
companies,” 12 CFR 225.144.