Allstate closes bank unit as Discover deal falls through
Allstate Corp, the largest publicly traded U.S. home and auto insurer, said it will shutter its banking unit after the collapse of a deal to sell deposits to Discover Financial Services.
“We are continuing with plans to wind down the Allstate Bank's operations and anticipate obtaining regulatory approval to cancel its banking charter by year-end 2011,” Allstate said today in a regulatory filing.
MetLife Inc. (MET) and Northbrook, Illinois-based Allstate are among insurers scaling back deposit-gathering operations as regulators increase oversight of banks. Allstate Chief Executive Officer Thomas Wilson said in February that the company was facing additional Federal Reserve requirements on debt-to-equity levels and overall risk management that would create “potential conflict” with existing oversight.
Allstate Bank had about $1.06 billion in deposits as of March 31, according to data on the Federal Deposit Insurance Corp. website. The insurer today said it had costs of $21 million this year through June 30 related to the planned dissolution of the bank.
“Due to the complex and changing regulatory environment, the approvals needed were not obtained by the agreed upon date” to complete the transaction, Allstate said today in an e-mailed statement. The firms also cancelled a marketing and distribution agreement that was announced with the planned sale.
Laura Gingiss, a spokeswoman for Riverwoods, Illinois-based Discover, didn't immediately return a call seeking comment.
To contact the reporter on this story: Noah Buhayar in New York at nbuhayar@bloomberg.net
To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net
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