Yesterday, MetLife Inc. (MET) announced that it is considering the possibility of selling MetLife Bank’s mortgage business.

MetLife believes that its mortgage business is very competitive and highly regulated, and hence, requires substantial amount of human and capital resources, which negatively affect the company’s core businesses of global insurance and employee benefits.

However, the company will continue to write mortgages while it is looking for a buyer. Additionally, the company plans to keep its reverse mortgage business. MetLife had started its mortgage and reverse mortgage businesses in 2008 through its MetLife Home Loans division.

Earlier, in July 2011, MetLife had announced its plan to sell MetLife Bank, which manages savings accounts, certificates of deposits and money market accounts. The reason for the sale was to focus on its core business and avoid the stringent Federal regulations, which it faces as a bank holding company.

MetLife is primarily an insurance company, whereby the banking unit contributes to merely 2% of its operating earnings. Yet, its classification as a bank holding unit impels it to abide by all the rules and capital requirements imposed on banks, including those imposed under the Dodd-Frank Act.

Therefore, management desires to liberate MetLife from these regulatory strictures as they are adversely affecting the non-banking businesses and putting it at a competitive disadvantage.

Other insurers are also exiting their banking businesses. In May 2011, Hartford Financial Services Group Inc. (HIG) decided to sell its banking unit to focus on its core businesses.

Moreover,  Allstate Corporation (ALL) wants to exit the banking business due to the disadvantages of being a bank holding company and the resultant negative impact on its core business. The company hopes to get regulatory approval to cancel its banking charter by the end of 2011.

Earlier, in February 2011, Allstate tried to exit the banking business by selling its liabilities to Discover Financial Services (DFS) but the deal failed to get regulatory approval.

Currently, MetLife carries a Zacks #3 Rank, which translates into a short term Hold rating.


 
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