Posted on 22 Jul 2011
In a bid to focus on its insurance business, MetLife announced on Thursday that it was considering selling its MetLife Bank depository business. The move would also allow MetLife to shed its status as a bank holding company.
“MetLife Bank represented just 2 percent of MetLife Inc.’s first quarter 2011 operating earnings, and we do not believe it is appropriate for the overwhelming majority of our business to be governed by regulations written for banking institutions,” Steven A. Kandarian, MetLife’s chief executive, said in a statement on Thursday.
The MetLife Bank unit had about $15.6 billion in total assets at the end of March, according to the company.
A sale of its depository business, which includes savings and money market accounts, will close a decade-long venture. MetLife opened the banking unit in 2001 and expanded into home loans in 2008, with the purchase of mortgage company EverBank and select assets from First Horizon Home Loans and First Tennessee Bank.
Although several insurance companies have banking operations, MetLife is one of the few to be classified as a bank holding company. Because of this status, MetLife was subject to the government’s “stress test” program, which tested the financial viability of some of the country’s financial institutions.
Amid continuing regulatory uncertainty, the firm may be paring its operations to protect itself from new rules that could hamper its insurance business, a Sanford C. Bernstein analyst, Suneet Kamath, said on Thursday.
“Banking regulation has been going up, and there still remains some uncertainty over what those requirements will be,” he said. “Regulation could lead to an unlevel playing field for MetLife relative to other insurance businesses.”
Mr. Kamath also cautioned that the sale of the depository business might ultimately have little effect on MetLife, since the company, which has a market capitalization of $44.5 billion,) is such a big player in the financial industry.
Even if it loses its bank holding status, Mr. Kamath said, it may not be able to shake-off increased regulatory scrutiny.
“It could change their regulatory outlook, but there’s a pretty good likelihood that they would still be deemed a systemically important financial institution,” he said.