UPDATE: MetLife Explores Sale Of Bank To Avoid New Regulations

MetLife Inc. (MET), the largest life insurer in the U.S., said it was exploring the sale of its much smaller banking operations to avoid new federal regulations.

MetLife's insurance operations are overseen by state regulators. But given its overall size and its bank charter, it was considered a leading candidate among insurers to be designated as a "systemically important financial institution" and face further scrutiny from the Federal Reserve and other regulators.

"We do not believe it is appropriate for the overwhelming majority of our business to be governed by regulations written for banking institutions," said Steven A. Kandarian, president and chief executive officer of MetLife Inc. "In a highly competitive global insurance marketplace, it is imperative that MetLife be able to operate on a level playing field with other insurance companies."

The company joins Hartford Financial Services Group Inc. (HIG) and Allstate Corp. (ALL) in shedding its bank operations in an effort to avoid the added scrutiny that banks face under the Dodd-Frank financial-overhaul bill enacted last year.

MetLife had been organized as a bank holding company since 2001 but would be restructured if the company were to complete the sale. MetLife plans to continue offering mortgages and reverse mortgages, but that business would need to be licensed on a state-by-state basis if MetLife were to separate the mortgage operation from its banking business.

MetLife Bank has total assets of $15.6 billion, including $9.3 billion in deposits as of March 31. The bank accounted for about 2% of the company's first-quarter operating earnings.

-By Erik Holm, Dow Jones Newswires; 212-416-2892; erik.holm@dowjones.com

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