Sept. 22 (Bloomberg) -- MetLife Inc., the insurer seeking to exit banking to limit U.S. oversight, amended a deal to sell about $7 billion in deposits to General Electric Co. so that Federal Deposit Insurance Corp. approval is no longer required.
The deal will now be subject to approval from the Office of the Comptroller of the Currency, the New York-based insurer said yesterday in a regulatory filing. Under the new arrangement, the deposits would be assumed by GE Capital Retail Bank rather than GE Capital Bank, the insurer said. MetLife gained 2.7 percent to $35.80 as of 6:01 p.m. yesterday in extended trading in New York.
MetLife Chief Executive Officer Steven Kandarian is seeking to reduce supervision from the Federal Reserve after the regulator twice blocked his company’s plans to return capital to shareholders. MetLife may increase its dividend and repurchase shares after exiting bank status, according to Barclays Plc.
The new arrangement will “enable us to ultimately deregister as a bank holding company following completion of the deal,” Christopher Breslin, a MetLife spokesman, said yesterday by phone. He declined to say when the sale would be completed or discuss the oversight of the Fed, which had given MetLife a Sept. 30 deadline to submit a new capital plan.
Bryan Hubbard, an OCC spokesman, didn’t respond to requests for comment.
“We made the decision to restructure the transaction,” Russell Wilkerson, a spokesman for Fairfield, Connecticut-based GE, said yesterday. “As we went through the integration process, which has been going on since December of last year, we saw the consumer deposits, technology platform and strategic needs in the retail bank were a better fit.”
MetLife said that once the deal is complete, it will take steps with the FDIC to terminate its deposit insurance and deregister as a bank holding company.
“As of now, the GE application is pending,” Andrew Gray, an FDIC spokesman, said yesterday.
MetLife 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 a June 12 deadline to submit a fresh capital plan to the Fed, and the regulator extended the deadline to Sept. 30.
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. increased its payout in 2009, 2010, and 2011. The Newark, New Jersey-based company isn’t subject to the same Fed scrutiny.
The Fed said March 13 that MetLife would fall short of U.S. capital standards in a severe economic downturn. MetLife was the only insurer among 19 large financial institutions the Fed evaluated. The shares fell 12 percent since then through the close of trading yesterday on the New York Stock Exchange.
MetLife has said the Fed’s model isn’t appropriate for insurers, which are usually overseen by state regulators in the U.S., and that the company was at an unfair advantage against smaller rivals who didn’t face the scrutiny.
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