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By Mia Lamar
MetLife Inc.'s (MET) long and winding effort to sell its online-banking operation to General Electric Co. (GE) took an unusual twist Thursday when the regulator weighing the sale erroneously indicated a decision might not be made until March, months later than expected.
The insurer agreed nearly a year ago to sell its online-banking operation with $7 billion in deposits to a unit of GE, but the regulator initially responsible for approving the deal was slow to act. After months of waiting, the companies amended the agreement in September so another regulator, the Office of the Comptroller of the Currency, would approve it instead.
MetLife and its shareholders are eager to see the deal completed, since a successful sale would remove MetLife from constraints imposed by the Federal Reserve on bank holding companies that have prevented MetLife from raising its dividend and buying back shares, as some of its rivals have done.
Investors were surprised Thursday when the OCC said on its website that a decision would be issued by March 6. Just Wednesday, the site had indicated a deadline of December 20, according to Sterne Agee analyst John Nadel, who in a note to clients said he was alarmed by such a dramatic extension of deadline within just a day.
If the OCC doesn't approve the sale by early next year, it adds drama to the deal and severely complicates matters for MetLife. Bank holding companies in January must submit so-called "stress test" data to the Federal Reserve--something MetLife is hoping to avoid.
MetLife failed this year's stress test and was prevented by the Fed from buying back shares and increasing its dividend. In the wake of that failure, MetLife executives complained about the "bank-centric" methodology of the test, saying the Fed didn't properly evaluate MetLife's capital. Ratings agencies universally rate MetLife among the strongest insurers in the U.S.
When he saw the new deadline on the OCC website early Thursday, Mr. Nadel said he couldn't "help but wonder if [MetLife] should pull the plug" on the sale, look for another buyer or simply wind down the bank.
Those concerns faded when he determined the date had been posted in error. In an updated note to clients, he wrote that he now believes the deal will get done and the Fed will exempt MetLife from January's stress testing.
A spokesman for the OCC confirmed an error had been made and attributed the mistake to the agency's licensing division. He said the website will be updated to reflect a new deadline of December 29th. He declined to explain why the deadline still had changed from that published on the website a day ago.
A spokesman for MetLife said the company spoke with the OCC Thursday and was "aware that a mistake has been made." A spokesman for GE declined to comment.
Mr. Nadel said he expects the companies will hear sooner than the end of December, given the proximity of the deadline to the Christmas and New Year's holidays.
Write to Mia Lamar at email@example.com
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