AIG announced it has not received about $420 million required as an interim step toward completion of the sale of its leasing subsidiary to a Chinese investment group sometime in June.
However, this snag — and the potential it raises that the sale could fall through — is unlikely to delay designation of AIG as a systemically significant nonbank by the government — a step that could occur as early as June 3.
Speculation centers on AIG, Prudential Financial, GE Capital to be the first nonbank SIFIs designated.
John Nadel, an analyst at Sterne Agee & Leach in New York, implied in an investor’s note that the only potential impact on AIG from the the failure of the deal to go through would be that the company could rethink the timing of share repurchases.
In his note, Nadel pointed to “press reports that the Financial Stability Oversight Council could meet and “formally designate the first wave of nonbank Systemically Significant Financial Institutions” June 3.
“Whether it occurs Monday or at a later date, we fully expect (in line w/consensus) AIG will be among the first nonbank SIFI designated,” said Nadel, adding “a designation alone means very little without understanding what the formal rules, stress testing, etc. will be.”
And without that knowledge, “we suspect managements (AIG included) will be less likely to repurchase shares given the risk that ultimately the rules prove more onerous than expected.”