Principal Financial Group agreed to sell $US200 million ($216 million) of deposits from its savings and loan unit and said it plans to divest commercial loans as part of an effort to limit the insurer's role in banking amid greater US supervision.
The deal with BofI Holding Inc. includes funds from individual checking accounts and certificates of deposit, according to a statement from the Iowa-based Principal. The insurer, which provides life coverage and retirement products, is seeking to deregister as a savings and loan holding company.
Insurers, including MetLife, Hartford Financial Services Group and Allstate, have sold deposits or retreated from banking as regulators increase oversight. Principal said its bank will operate as a limited-purpose trust institution after the sales are complete and will continue offering individual retirement accounts.
"Principal Bank will need to divest of all commercial and commercial real estate loans before Principal Financial Group can formally be deregistered," a spokeswoman for the company, Sonja Sorrel, said. "We are working on those transactions and the regulatory approvals they will require.We are still on track in our efforts to accomplish deregistration by year-end."
Principal Bank had more than $US260 million in commercial real estate loans as of March 31. The bank operates online with no physical branches, as does BofI, the holding company for Bank of Internet.