The merger between BlackRock and Barclays Global Investors (BGI) began well, however the combined entity is now showing early strains following a recent spate of local departures, according to a new report by Standard & Poor's.
Following an initial change at the local senior management level with the appointment of ex-BGI chief executive Will Britten as head of BlackRock Australia, a steady stream of local departures has developed at both the management and key investment capability levels.
"While it is not unusual to see some senior turnover following a merger of this size, these latest departures are of serious concern to S&P," the report said.
"Any further departures would be particularly disruptive to the business and disappointing given the progress made already to integrate the two businesses.
"For the time being, these departures are confined to the Australian equity strategies, but the market will be watching closely to see how BlackRock responds to prevent a potentially more widespread contagion."
Superannuation funds have also recently reviewed their existing mandates as a result of the merger between BlackRock and BGI.
Tasmania-based superannuation fund Tasplan has already terminated BGI from its Australian equities portfolio, while Westscheme dropped its emerging market equities mandate with BlackRock.
Legalsuper, which has a fixed income mandate with BlackRock, is also reviewing its mandate.
"When mergers take place, there will always be changes. We have not taken any action as yet. It is more a case of simply reviewing the relationship at the moment," legalsuper chief executive Andrew Proebstl said.
