MetLife’s stock price soared more than 5 percent on June 19 as a result of a decision by the Federal Reserve Board to give MetLife more time to resubmit a capital plan that failed a stress test in March.
The stock rise was prompted by a MetLife securities filing today indicating that it will have until Sept. 30 to resubmit its capital plan.
The filing said that MetLife was informed by letter on Monday of the Federal Reserve Board decision.
“The extension allows additional time for the FDIC to act on the pending sale of MetLife Bank’s deposit business to GE Capital,” MetLife said in a statement.
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The MetLife statement said, “once those deposits have been transferred out of MetLife Bank, MetLife will cease to be a bank holding company and [will] no longer be required to submit a capital plan or regulatory reports to the Federal Reserve.”
The Federal Reserve Board action followed by three days an investor’s note by John Nadel of Sterne Agee which said the recent underperformance of MetLife’s stock relates to investor concern that the Federal Reserve Board would force it to resubmit promptly the capital plan that failed in March.
Since MetLife would likely fail this stress test again, investors fear this could lead, under a worst case scenario, to a year’s delay in MetLife’s ability to raise its dividend or buy back stack, or perhaps a requirement to raise more capital, Nadel said.