General Electric Co. is acquiring the U.S. retail banking business of MetLife, giving the Fairfield-based giant some $7.5 billion in deposits to go with its own retail finance business that has focused on credit cards.
The acquisition comes on the heels of GE scheduling its annual meeting for Detroit, where it is hiring 1,300 people in Michigan to bring its total workforce there to more than 3,500. GE will hold the meeting at Detroit”™s waterside Renaissance Center, which General Motors Corp. owns and where GM has its headquarters.
GE and New York City-based MetLife did not immediately disclose financial terms of the deal, which gives GE Capital a major online platform to attract deposits, according to Dan Henson, CEO of Norwalk-based GE Capital”™s operations in the Americas.
In a mid-December conference call with investment analysts to preview the company”™s priorities in 2012, GE CEO Jeff Immelt hinted at GE Capital making such a move.
“We want to have less wholesale funding and more deposit-based funding ”“ we”™re kind of working through that process today,” Immelt said. “The way I think about GE Capital strategically is we only want to be in those businesses where we have a strong competitive advantage versus banks. That is where we want to play. We want to always have control of our own destiny.”
Long enjoying comparatively scant scrutiny from federal regulators compared to traditional banks, under the Dodd-Frank financial reform act that is changing for GE.
“A lot of the chapters haven”™t been written yet in financial services about where the regulators are going to go and how the markets are going to be,” Immelt said.
Last month, the company agreed to pay $70 million to settle an investigation into bid-rigging in the municipal bond derivatives industry, becoming the fifth company to reach a settlement in an extensive probe into that market after Bank of America Corp., JPMorgan Chase & Co., UBS AG and Wachovia, which is now owned by Wells Fargo.
The settlement covering Stamford-based GE Funding Capital Market Services Inc. includes nearly $200,000 for Connecticut, as well as a portion of more than $4 million covering a civil penalty and legal expenses. Fairfield-based GE said the investigation focused on the actions of three former employees in a business unit GE discontinued in 2010. Authorities said GE Funding, in concert with certain brokers, engaged in conduct that allowed the broker to determine in advance that GE Funding would win a bid for a guaranteed investment contract. The conduct allowed GE Funding to submit a “last-look”™”™ bid, while the broker arranged for other financial institutions to submit purposely non-winning courtesy bids. Because of the “last look,” on many occasions GE Funding was able to lower its bid to the issuer and still win the transaction.
Immelt said GE is in a far better position to manage the wide range of housekeeping it needs to maintain under the new economic and regulatory realities facing it today.
“There”™s no doubt that between 2007 and today ”“ from an enterprise-risk standpoint ”“ this company”™s better in every way,” Immelt said. “I think in terms of scenario planning, in terms of stress testing, in terms of looking around corners and things like that ”¦ there”™s just no doubt that the company is significantly better today than it”™s ever been.”
