Here How Metlife Will Shed Bank Holding Company Status

MetLife’s (NYSE:MET) decision to sell its depository business to General Electric (NYSE:GE) is a good one, Sandler O’Neill analyst Edward Shields said in a note today. While MetLife is now considered to be a bank holding company, selling its deposits could free the company up in many ways by allowing it to change its classification, as well as bringing it under the regulation of state insurance commissioners instead of the Fed.

“We believe this transaction bodes well for MET for three reasons. First, MET is organized as a bank holding company and unlike its life insurance peers, MET is regulated by the Treasury rather than by a state insurance commissioner. This difference in regulatory oversight has created some headwinds for MET. Most recently, MET’s capital plan to increase its dividend and to reinstate a share repurchase authorization was denied by the Federal Reserve…Second, MET now has greater clarity regarding the progress of changing regulators…Third, the sale will generate some additional capital – at this time, we do not know how much as the terms of the sale were not disclosed. Any additional capital would only be incremental to MET’s $3.5 billion of deployable capital at the end of 3Q11. MET could announce a share repurchase plan after the Federal Reserve completes its new round of stress testing in March 2012.”

Here’s how Metlife and GE are reacting to the deeper analysis of their deal:

MetLife, Inc. (NYSE:MET): MET shares recently traded at $31.43, up $0.6, or 1.95%. They have traded in a 52-week range of $25.61 to $48.72. Volume today was 1,567,398 shares versus a 3-month average volume of 11,588,400 shares. The company’s trailing P/E is 5.88, while trailing earnings are $5.34 per share.

General Electric Co. (NYSE:GE): GE shares recently traded at $18.10, up $0.27, or 1.51%. They have traded in a 52-week range of $14.02 to $21.65. Volume today was 15,945,298 shares versus a 3-month average volume of 67,653,900 shares. The company’s trailing P/E is 13.85, while trailing earnings are $1.31 per share.

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