Metlife’s Bank Gets Conditional OK To Sell $6.5 B In Deposits
The Office of the Comptroller of the Currency has issued conditional approval for MetLife Inc.'s bank to sell about $6.5 billion in deposits to GE Capital.
When GE Capital completes the acquisition, which is subject to closing conditions, deposit customers of MetLife Bank NA will become customers of GE Capital Retail Bank, a unit of GE Capital, MetLife, the largest U.S. life insurer, said in a statement.
After closing, MetLife (NYSE: MET) said it would work with the Federal Deposit Insurance Corp. and the Federal Reserve to take the needed steps to deregister as a bank holding company.
MetLife last year said it would be exiting the banking business to avoid the additional scrutiny placed on large banks under the Dodd-Frank Wall Street Reform and Consumer Protection Act. In December 2011, the company said it would sell most of the then-$10.7 billion depository business of its bank to GE Capital Financial (Best's News Service, Dec. 27, 2011) but MetLife in September of this year said it changed the agreement for the sale to GE Capital Bank, which meant the Office of the Comptroller of the Currency would be the main regulator that needed to approve the sale — not the FDIC (Best's News Service, Sept. 24, 2012).
In March, MetLife was one of four bank holding companies that failed the Federal Reserve's stress test (Best's News Service, March 14, 2012), and the central bank in October granted MetLife’s request for a second extension to Jan. 5, 2013 to resubmit its capital plan under the Fed's capital plans rule (Best's News Service, Oct. 2, 2012).
During MetLife's third-quarter earnings conference call, Steven Kandarian, MetLife's chairman, president and chief executive officer, said until MetLIfe’s debanking process is complete, the company will remain regulated by the Federal Reserve as a bank holding company. After its debanking process is complete, MetLife faces the possibility of being named a non-bank systemically important financial institution, “which would place us back under Federal Reserve supervision” (Best's News Service, Nov. 1, 2012).
Dodd-Frank gives the Financial Stability Oversight Council the authority to designate a company as systemically important if the FSOC determines that its failure or disruption to its operations could threaten the stability of the U.S. financial system. In April, the FSOC adopted standards for determining whether a nonbank financial institution should be considered a SIFI, which put large life insurers in its sights (Best's News Service, April 4, 2012).
Prudential Financial (NYSE: PRU), the second-largest U.S. life insurer, in October received notice from the FSOC that it would be reviewed in stage three of the agency's review process to determine whether the company meets the criteria as a SIFI (Best’s News Service, Oct. 19, 2012). And American International Group Inc. (NYSE: AIG) also may be facing additional federal scrutiny as regulators consider deeming the company a SIFI. In October, AIG said it received a notice it is under consideration by the FSOC for a SIFI designation (Best's News Service, Oct. 2, 2012). The insurer anticipated coming under regulation by the Federal Reserve as a savings and loan holding company (Best's News Service, Sept. 14, 2012).
Metropolitan Life Insurance Co. currently has a Best's Financial Strength Rating of A+ (Superior).
Shares of MetLife were trading at $32.83 the afternoon of Dec. 13, down 2.32% from the previous close.