MetLife Quits Mortgage Business, to Cut Most of 4,300 Workers
MetLife to Cut Most of 4,300 Workers
Keith Bedford/Bloomberg
Pedestrians pass by the headquarters building of MetLife Inc. in New York.
Pedestrians pass by the headquarters building of MetLife Inc. in New York. Photographer: Keith Bedford/Bloomberg
MetLife Inc. (MET), the largest U.S. life insurer, said it will shut its home mortgage-origination operation, costing the company at least $90 million and most of the 4,300 employees at the unit their jobs.
“The majority will no longer have a position,” said John Calagna, a spokesman for New York-based MetLife, in an interview yesterday. About 20 percent of the workers are based in Irving, Texas, and the rest are scattered throughout the U.S., he said.
MetLife said in October it was seeking a buyer for the mortgage unit after announcing plans to sell deposit-gathering operations to reduce federal oversight. The firm reached a deal last month to sell about $7.5 billion of bank deposits to General Electric Co. The Federal Reserve, which oversees MetLife because of its size and banking operations, rejected its plan last year to raise the dividend and resume share buybacks.
“It’s hard to sell a banking business right now, especially a mortgage business, given all of the potential pitfalls” tied to regulation, said Dan Theriault, an analyst at Portales Partners LLC who has a “hold” rating on the company. “They said they had two options, they could sell the bank or wind it down, and they’re doing a combination of the two.”
MetLife rose 3.9 percent to $34.55 in New York trading yesterday. The company has gained 11 percent since Dec. 31 after falling 30 percent last year.
Financial firms globally disclosed plans in 2011 to eliminate more than 200,000 jobs amid market turmoil, Europe’s sovereign-debt crisis and concerns that U.S. economic growth will slow.
Banks Trim Payrolls
Bank of America Corp., the biggest U.S. lender by assets, said in September it plans to eliminate 30,000 jobs in the next few years. Chief Executive Officer Brian T. Moynihan said the cuts are part of an effort to bolster profit and the company’s stock. Citigroup Inc., the third-biggest U.S. lender by assets, plans to cut about 4,500 jobs in coming quarters to trim costs amid slumping revenue, CEO Vikram Pandit announced last month.
MetLife said affected employees include salespeople and support staff. The company hasn’t begun dismissals and will give employees 60 days notice, Calagna said. Workers can apply for other positions within the company, he said. MetLife had about 66,000 employees as of Dec. 31, 2010, according to a filing.
CEO Steven Kandarian, promoted to the top job in May, is reviewing the insurer’s businesses and told investors last month that “everything is on the table” as he seeks to improve shareholder returns. Kandarian’s predecessor at CEO, Robert Henrikson, expanded MetLife’s business outside the U.S. with the acquisition of American Life Insurance Co. from American International Group Inc. for about $16 billion.
MetLife will continue to service current home-loan clients and to offer reverse mortgages, the company said yesterday. The wind-down may cost as much as $110 million, MetLife said.
To contact the reporter on this story: Andrew Frye in New York at afrye@bloomberg.net
To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net
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