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MetLife to acquire New Jersey bank
Metropolitan Life Insurance Co. plans to purchase Grand Bank North American (N.A.) of Kingston, N.J., the first move in its plan to become a player in the retail banking business.
|"This agreement is an important step toward reaching our ultimate goal of being in the retail banking business."|
The New York-based insurer's proposed purchase is subject to approval by the Federal Reserve Board. Grand Bank N.A., which will be renamed MetLife Bank, has total assets of $80 million, deposits of $52 million, and shareholder equity of $7.3 million. The sale price of the bank is undisclosed.
"This agreement is an important step toward reaching our ultimate goal of being in the retail banking business," says Judy Weiss, executive vice president for MetLife's banking unit, which was created in May. "We will continue to explore opportunities that provide new services for our customers."
Holly Sheffer, a spokesperson for MetLife, says the company is not sure how Grand Bank products, which include banking accounts, checking accounts, and certificates of deposit (CDs), will be sold, but you won't be seeing "brick and mortar" MetLife banks popping up across the country. Sheffer says that possibilities include selling the products over the phone, on the Internet, or through MetLife agents.
However, Sheffer would not say if MetLife plans to offer all three. "We're not at the stage where we can be specific," she says. "We're still very much in the research and development phase."
Buying into the business
MetLife is one of many insurance companies looking to enter the banking business — a strategy spurred by a 1999 financial services reform bill that allows financial services companies and insurance companies to sell each other's products, subject to federal approval.
Other insurance companies that have received charters from the Federal Office of Thrift Supervision to sell financial services or banking products are Aetna Inc., American International Group, Hartford Financial Services, Massachusetts Mutual Life Insurance Co., Northwestern Mutual Life Insurance Co., and State Farm Mutual Automobile Insurance Co.
Sheffer says that because MetLife acquired a bank and did not start one on its own, it did not need to apply for a federal charter. She also notes that MetLife does not plan to involve itself in the mortgage or credit businesses, like many companies that receive thrifts.
Ryan O'Connell, senior vice president at Moody's Investors Service, says it is much faster for an insurance company to involve itself in particular business by making an acquisition rather than starting from scratch. "There's no perfect way to do this," O'Connell says. "It's possible for some companies who don't have close banking ties to effectively buy a charter [through buying a bank]."
O'Connell says the size of the bank is not really an issue because MetLife likely is looking for expertise in running a bank, rather than looking to acquire Grand Bank's customers.