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In December of last year, MetLife (NYSE:MET) announced that it would be selling its deposits and “escape bank status” in order to get away from government oversight. Without the deposits, MetLife wouldn’t technically be a bank holding company, and would no longer be regulated by the Federal Reserve. GE (NYSE:GE) Capital’s commercial banking division originally struck a deal for the $7 billion in deposits, which would be subject to approval from the Federal Deposit Insurance Corp. After eight months of delay, the companies have restructured the deal so that GE Capital’s retail bank will buy the deposits, transferring regulatory authority to the Office of the Comptroller of the Currency.
MetLife wants to sell off its banking operations so that it can buy back shares and raise dividends, a strategy the Federal Reserve frowned on. Without Fed oversight, MetLife will be more flexible to pursue this plan. Analysts expect MetLife to buy back about $2 billion in stock and raise dividends by almost 50 percent.
GE, meanwhile, has been trying to cut down on the amount of short-term commercial paper it issues since the crisis in 2008. Analyst Brian Langenberg of Langenberg & Co. has said that the deposits would give GE a “low-cost funding source.”
“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,” said Russell Wilkerson, a spokesman for GE.
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