Hastening its exit from the US retail banking market, MetLife is to sell the bulk of the depository business of MetLife Bank to GE Capital. In addition, MetLife has announced the closure of its forward residential mortgage origination business which is housed in MetLife Bank.
Under the MetLife Bank sale agreement, GE Capital will acquire $7.5bn in MetLife Bank deposits. Excluded from the transaction are about $3bn in custodial deposits associated with MetLife Bank’s forward mortgage business and certain other deposits which appear to amount to only some $200m.
MetLife anticipates that it will incur after tax costs of between $90m and $110m as a result of the closure of its forward mortgage business. The insurer noted that it will remain active in the reverse mortgage market.
The deal with GE Capital and closure of the forward mortgage business are part of a strategy to end MetLife’s status as a bank holding company, and the unwanted Federal Reserve Board oversight that it brings. In the first nine months of 2011, MetLife’s entire retail banking business, including mortgages, represented less than 2% of its operating earnings.
The restrictive nature of MetLife’s bank holding company status was vividly illustrated in October 2011 when the Federal Reserve turned down an application by the insurer to increase its annual dividend and resume buybacks of its own shares.
MetLife president and CEO Steven A Kandarian has emphasised that bank holding company status prevents MetLife from operating on a “level regulatory playing field” with other insurers.