MetLife Inc. (MET) received conditional U.S. approval from the Office of the Comptroller of the Currency to sell $6.5 billion of bank deposits to General Electric Co. (GE), easing the insurer’s path to boosting its dividend and repurchasing shares. MetLife advanced in extended trading.
After the deal is complete, MetLife will work with the Federal Deposit Insurance Corp. and Federal Reserve to deregister as a bank holding company, according to a statement today from the New York-based insurer.
Chief Executive Officer Steven Kandarian is selling bank assets to reduce oversight from the Fed, after the regulator blocked the insurer’s plans to return capital to shareholders. Fairfield, Connecticut-based GE is seeking to add deposits to diversify funding sources and reduce reliance on debt markets.
“Until our de-banking process is complete, we remain regulated by the Federal Reserve as a bank holding company,” MetLife Chief Financial Officer John Hele said last month.
MetLife, the largest U.S. life insurer, has kept its annual dividend at 74 cents a share since 2007 and hasn’t announced a buyback since 2008. No. 2 Prudential Financial Inc. (PRU) increased its payout four straight years. The Newark, New Jersey-based company isn’t subject to the same Fed scrutiny.
The insurer said in March that it would escape bank status by the end of June. Kandarian later backed away from that assessment, saying he couldn’t read regulators. MetLife had faced a June 12 deadline to submit a fresh capital plan to the Fed, and the overseer extended the deadline.
MetLife climbed 2.5 percent to $34.45 at 5:45 p.m. in New York. The company had advanced 7.8 percent this year on the New York Stock Exchange, while the KBW Insurance Index gained 15 percent. GE was little changed in extended trading.
“This regulatory approval is another important step in this transaction,” said Russell Wilkerson, a spokesman for GE’s finance unit “We’re targeting first quarter for closing. We look forward to executing on our deposit strategy.”
Andrew Gray, a spokesman for the FDIC, declined to comment.
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