American International Group Inc. (AIG) will return funds to customers of its banking unit and shut their accounts as the Dodd-Frank Act places limits on insurers with deposit-taking units.
AIG Federal Savings Bank “will no longer be servicing retail deposit accounts as of Sept. 30,” according to a letter to customers. “All accounts will be automatically closed as of that date and any funds, including all interest due on your accounts, will be returned.”
AIG is joining Principal Financial Group Inc. (PFG) in narrowing its focus ahead of rules that limit proprietary trading and investments in private-equity or hedge funds by insurers with bank units. MetLife Inc. (MET), Hartford Financial Services Group Inc. and Allstate Corp. have sold deposits or retreated from banking as regulators increase oversight.
“AIG Federal Savings Bank is currently undergoing an orderly transition from a traditional savings bank to a trust only thrift,” Jon Diat, a spokesman for the New York-based insurer, said in an e-mail yesterday. Robert Benmosche, the chief executive officer of New York-based AIG, said last year that the insurer was weighing whether to shutter its bank to limit the effects of the Volcker rule. AIG is a savings and loan holding company, and some of the restrictions may apply to the company even if it ends its bank status, according to the insurer’s annual report.
The bank had 30 employees and $920.5 million in assets as of March 31, according to Federal Deposit Insurance Corp. data. The Wilmington, Delaware-based unit offered products including mortgages and certificates of deposit through its website and over the phone.
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