MetLife Inc. on Monday said it completed the sale of its online-banking operation to General Electric Co. more than a year after first disclosing the deal, and began taking steps to surrender its status as a bank-holding company.
Regulatory approval for the deal had taken far longer than MetLife and GE initially expected when they disclosed the transaction in December 2010. The two companies restructured the deal in September in a way that required the approval of a new regulator, the Office of the Comptroller of the Currency, after waiting for months for the Federal Deposit Insurance Corp. to approve the transaction.
Under the restructured deal, MetLife sold the business to a different unit of GE Capital than it had originally planned. The approval from the OCC came last month.
MetLife had been eager to unload its banking business so it can shed its bank-holding company status-and Federal Reserve capital constraints that accompany it. The effort to sell the banking business gained urgency last March when the insurer failed the Fed's "stress test," forcing the insurer to backtrack on a plan to return capital to shareholders.
Companies that fail the test are required to resubmit their capital plans to the Fed. The Fed, aware that completion of the deal could eliminate the need for further stress-testing, granted MetLife repeated extensions to the deadline for when it needed to resubmit. The latest extension was granted last week.
"The closing of the transaction with GE Capital is an important step in the process of exiting retail banking," said Chief Executive Steven Kandarian in a statement.
MetLife said in a statement it had begun taking "the necessary administrative steps to deregister as a bank holding company." Executives have previously said the remaining steps involved in the "de-banking" weren't expected to be arduous.
Still, MetLife's plans to return capital to shareholders are far from clear. Analysts have predicted MetLife will eventually be regulated as a nonbank systemically important financial institution under the 2010 Dodd-Frank financial-overhaul law.
Such oversight likely would be tailored to the insurance industry-unlike the earlier stress tests-but could carry restrictions on MetLife's ability to raise its dividend and to buy back shares. It is unclear when those regulations, which have yet to be finalized, would go into effect.