GE poised for entrée into retail banking

This week’s announcement by General Electric’s finance operation to acquire $7.5 billion in retail deposits from MetLife is significant on a number of fronts, most notably that the competitive threat from GE, a “non-bank bank,” is very much alive going into the new year.

The deal matches up MetLife’s strategy to exit what it sees as restrictive oversight and federal regulation on the bank side so it can focus on its core insurance business (and be regulated as an insurer, not a bank).  Some analysts have gone so far to call this move a “win by subtraction” for MetLife as it exits a decade-long run as a bank holding company.

Conversely, GE Capital sees huge opportunity to increase its customer base and shore up in-house deposits to reduce reliance on external funding from unsettled financial markets.

“This acquisition fits with our plans to launch a U.S. deposit platform,” Dan Henson, president and CEO of GE Capital - Americas, said in its press release this week. “It accelerates our timing, helps us build a stronger and more cost efficient funding base, and allows us to better serve our middle market commercial customers.”

Once the deal closes next June, and with the addition of MetLife’s $7.5 billion in deposits to GE’s existing $23 billion U.S. deposit base, GE would be among the nation’s top 100 banks. 

And that should have bankers keeping a watchful eye on this deal as GE also rolls out a new online banking platform to help grow online deposits, much like Discover Financial Services and American Express have experienced.

If you were to ask bank executives what keeps them up at night, perhaps this non-bank bank news will be another item on their growing list of worries for the new year.