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(Reuters) - MetLife Inc (MET.N) has closed the sale of its deposit-taking business to General Electric Co (GE.N), a move that allows the largest U.S. life insurer to start the process of dropping registration as a bank holding company.
For GE, the deal will allow its GE Capital unit to rely less on borrowing by providing it with an alternative source of funding for its lending.
The deal, in which GE will take on about $6.4 billion in bank deposits had been in the works for more than a year, with regulatory review the main reason for the delay.
MetLife is not disclosing any other financial terms, said MetLife spokesman Chris Breslin.
"This is really good news for MetLife," said Vincent Lui, an equity analyst for Morningstar. "It's one last hurdle they need to clear in order to exit itself from a bank holding company structure."
As a bank holding company, MetLife was subject to oversight by the Federal Reserve. In March the insurer failed a stress test and was blocked by the Fed from raising dividends or buying back shares.
New York-based MetLife said the deal reflected its desire to focus on insurance and employee benefits. It said it has started the process of deregistering as a bank holding company.
The two companies in September tweaked the deal structure to make it subject to the approval of the Office of the Comptroller of the Currency, rather than the Federal Deposit Insurance Corp, and won approval in mid-December.
Fairfield, Connecticut-based GE reached the deal to buy the deposit-taking unit in December 2011, with an eye toward making its GE Capital finance unit less dependent on borrowing.
With the deposit sale closed, investors will scrutinize MetLife's fourth-quarter earnings report, expected in mid-February, for insights on whether a U.S. government panel will tag the company as a systemically important financial institution, or SIFI.
"If it's considered a SIFI, there's more regulation," said Morningstar's Lui. "We might find out more about that in the upcoming earnings."
MetLife will likely not resume share buybacks until it "receives clarity on the implications of a non-bank SIFI designation," according to a Barclays equity research note to clients.
Shares of MetLife were down 36 cents, or 0.4 percent, to $35.98 in early afternoon trading, while GE shares slipped 7 cents, or 0.1 percent, to $21.11. The S&P 500 stock index was also slightly down, by about 0.2 percent.
Reporting by Scott Malone in Boston; Additional writing and reporting by Chelsea Emery; Editing by Dale Hudson and David Gregorio