Recently, MetLife Bank N.A. - the banking arm of
) completed the long overdue sale of its deposit business to GE
Capital Retail Bank, FSB. The latter is a subsidiary of GE
Capital - the financial services unit of
General Electric Co.
The sale was completed following the approval of the Office of
the Comptroller of the Currency (OCC), which was received in
December last year. Consequently, the bank deposits of MetLife
Bank, which amounted to about $6.4 billion, have been transferred
to GE Capital Retail Bank.
MetLife initially had a deal with GE Capital Bank to sell its
bank deposits, as announced in December 2011. However,
complications in achieving regulatory approvals from Federal
Deposit Insurance Corp. (FDIC) postponed the closure of the deal
from the target of the first half of 2012. Hence, the deal was
amended and simplified in September 2012, changing the buyer to
GE Capital Retail Bank.
The fact that GE Capital Retail Bank comes under the
regulatory purview of the OCC, significantly cleared the
regulatory snags for the successful completion of the deal.
Hence, the companies no longer required the approval of FDIC,
leading to the swift closure of the long overdue deal.
The sale was a part of MetLife's efforts to exit the retail
banking business to focus on its core insurance and employee
benefits businesses. The company is primarily an insurance
company and the banking unit contributes a small fraction of its
operating earnings. Yet, MetLife's classification as a bank
holding company impels it to abide by all the strict rules and
capital requirements imposed on banks, including those imposed
under the Dodd-Frank Act.
Thus, in order to avoid these stringent Federal regulations,
MetLife intends to de-register as a bank holding company and has
already taken certain administrative steps for the same.
Management believes that the strict regulations on bank holding
companies are adversely affecting MetLife's non-banking
businesses and putting it at a competitive disadvantage.
MetLife currently carries a Zacks Rank #5 (Strong Sell), while
General Electric carries a Zacks Rank #3 (Hold).
GENL ELECTRIC (GE): Free Stock Analysis
METLIFE INC (MET): Free Stock Analysis Report
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