MetLife to sell US$70bn portfolio to JPMorgan


Sun, Nov 04, 2012 - Page 13

MetLife Inc agreed to sell the mortgage-servicing business of its bank to JPMorgan Chase & Co, as the biggest US life insurer works to reduce oversight from federal regulators.

The deal will help JPMorgan, the biggest US bank by assets, increase its servicing business by more than 5 percent, according to a statement issued on Friday. Terms of the transaction for the portfolio of about US$70 billion were not disclosed, New York-based MetLife said.

MetLife chief executive officer Steven Kandarian, 60, is seeking to end the insurer’s status as a bank-holding company to limit US Federal Reserve oversight that has blocked the insurer from raising its dividend or repurchasing shares. The firm has reached deals to sell its reverse-mortgage portfolio and most of its US bank deposits.

“Given MetLife’s strategic focus as a global insurance and employee-benefits leader, the company decided in 2011 that a bank holding company structure was no longer appropriate,” MetLife said in the statement.

JPMorgan, led by CEO Jamie Dimon, adds a pool of borrowers whose loans it can service and offer to refinance, boosting fees. The New York-based lender is the third-largest mortgage servicer, after Wells Fargo & Co and Bank of America Corp, according to data compiled by Bloomberg from Inside Mortgage Finance.

Expanding in mortgage servicing is a “once-in-a-lifetime” opportunity as some firms scale back, US Bancorp CEO Richard Davis said earlier this year.

Ocwen Financial Corp is among firms adding home loans by acquisitions. It won a US$3 billion auction for Residential Capital LLC’s mortgage-servicing unit last month, outbidding Nationstar Mortgage Holdings Inc.

Ocwen also agreed to buy Homeward Residential Holdings Inc from Wilbur Ross’s WL Ross & Co last month.

Servicers collect payments from borrowers and pass them on to mortgage lenders or investors, minus fees. They also handle foreclosures when borrowers do not pay.

MetLife agreed to sell its reverse-mortgage portfolio to Nationstar in April. The insurer reached a deal to sell about US$7.5 billion of deposits to a unit of General Electric Co.

Kandarian has been unable to win approval for the deposit sale as quickly as he had planned, preventing him from ending the firm’s bank status. MetLife and Fairfield, Connecticut-based GE amended the deal in September so that Federal Deposit Insurance Corp approval was no longer required.

MetLife faces a January deadline to submit a new capital plan to the Fed. The insurer may be regulated as a non-bank systemically important financial institution after it exits bank status, Kandarian said on a conference call on Thursday.