MetLife to Sell Mortgage Business - Analyst Blog
October 13 2011 - 1:46PM
Zacks
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.
ALLSTATE CORP (ALL): Free Stock Analysis Report
DISCOVER FIN SV (DFS): Free Stock Analysis Report
HARTFORD FIN SV (HIG): Free Stock Analysis Report
METLIFE INC (MET): Free Stock Analysis Report
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