General Electric makes major move into banking with MetLife deal

General Electric makes major move into banking with MetLife deal
Conglomerate acquires $7.5B in accounts from insurer; sale includes online banking platform
JAN 09, 2012
MetLife Inc. agreed to sell most of its bank's deposits to General Electric Co. as the largest U.S. life insurer seeks to limit oversight by the Federal Reserve. GE's finance unit will acquire about $7.5 billion of MetLife Bank's deposits, the New York-based insurer said today in a statement. Terms of the transaction, to be completed in the second quarter, weren't disclosed. MetLife Chief Executive Officer Steven Kandarian, 59, reiterated plans in October to sell the banking operations after the Fed rejected the company's proposal to raise its dividend and resume share buybacks. MetLife is subject to Fed oversight because of its size and ownership of its bank, which had $10.7 billion in deposits as of Sept. 30. “This whole notion of Met being caught in the wrong place at the wrong time as it relates to its bank regulatory setup, has been a significant overhang on the stock,” Randy Binner, an analyst at FBR Capital Markets, said in a phone interview. The sale is “a significant forward step in their process of trying to shed their bank holding company status.” He rates the insurer “outperform.” MetLife rose 1 percent to $31.40 at 1:41 p.m. in New York. The insurer had slid 30 percent this year through Dec. 23. Fairfield, Connecticut-based GE slipped less than 1 percent to $18.08. The deal, which includes an online banking platform, will aid GE Capital's plans to begin taking direct deposits in the U.S. over the Internet in the first half of 2012, said Russell Wilkerson, a spokesman for the company. The finance unit is seeking to limit its dependence on long-term bond markets for funding. GE Capital said this month that it plans to accept money through websites affiliated with its two banks in Utah and backed by the Federal Deposit Insurance Corp. Taking online deposits strengthens GE Capital's liquidity after the financial crisis of 2008 left some investors wary of banks and financial stocks. The finance unit relies on debt for the bulk of its funding rather than deposits or trading as do conventional banks. The online initiative will increase a U.S. deposit base that has grown from about $1 billion in 2007 to about $23 billion through the third quarter, according to a presentation on the company's website. GE Capital's long-term goal is funding its Commercial Lending & Leasing Americas with deposits. MetLife Bank's customers are stable and high net worth, which was attractive to GE Capital, said Wilkerson. The deposit- taking system is proven and will help GE immediately enter the market, rather than build one out itself, he said. “We acquired it at an attractive price, and it fits perfectly with our plan,” Wilkerson said in an e-mail. About $3 billion in deposits related to MetLife Bank's mortgage business and some other funds weren't included in the deal and will be divested over the next six months, according to Christopher Breslin, a spokesman for the insurer. Deutsche Bank AG was financial adviser to MetLife and Wachtell, Lipton, Rosen & Katz was its legal adviser. --Bloomberg News--

Latest News

Mesirow acquires part of flexPATH in second retirement deal of 2026
Mesirow acquires part of flexPATH in second retirement deal of 2026

Chicago-based Mesirow Fiduciary Solutions adds flexPATH's plan-level outsourced fiduciary book, boosting its retirement market reach to $164 billion.

Advisor moves: LPL lands $350M veteran advisor duo in Florida
Advisor moves: LPL lands $350M veteran advisor duo in Florida

Also, Raymond James's employee advisor channel adds breakaways from Wells Fargo and Stifel, while UBS welcomes an ex-Morgan Stanley duo in Indiana.

SEC accuses crypto firm founder of running $425 million Ponzi scheme
SEC accuses crypto firm founder of running $425 million Ponzi scheme

It promised guaranteed principal and 10% monthly returns. The SEC says it invested nothing.

MassMutual Ascend tops $2 billion in RIA annuity sales as advisors warm to income products
MassMutual Ascend tops $2 billion in RIA annuity sales as advisors warm to income products

Ten years after entering the fee-based annuity market, MassMutual Ascend says nearly half its lifetime sales came in the past two years alone – but barriers remain among fee-only advisors.

Fintech bytes: Wealth tech firms target advisor productivity with new integrations
Fintech bytes: Wealth tech firms target advisor productivity with new integrations

Amplify, WealthReach, Zeplyn and Zocks have unveiled partnerships aimed at automating portfolio management, content creation, account opening, and client communication.

SPONSORED Direct indexing webinar targets tax-loss harvesting amid market swings

Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains

SPONSORED Who builds the income when the pension disappears?

Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income