NEW YORK (
(ALL - Get Report)
has sold $1.1 billion in bank deposits to
Discover Financial Services
(DFS - Get Report)
, exiting the retail banking business after 10 years.
Financial terms of the deal were not disclosed, Allstate said. As part of the deal terms, Discover will continue to provide banking services to Allstate customers. According to a spokesperson, Allstate Bank received its thrift charter in 1998 and began offering retail banking products in 2001.
Allstate and other insurers that own banks such as
(MET - Get Report)
(PRU - Get Report)
have been regulated by the Federal Reserve and the Office of Thrift Supervision in addition to state insurance commissioners because of their involvement in banking.
"Allstate Financial has refocused on insurance, retirement and investment products. That, combined with the changing regulatory environment, led us to the determination that operating Allstate Bank is no longer core to our long-term strategy," said Allstate CEO Matthew Winter in a company press release.
Regulatory changes in the financial services industry have forced many insurers to divest non-core businesses over the past year.
(PFG - Get Report)
shed its medical insurance business, and MetLife announced that they would drop long-term care insurance last year.
The deal, which is expected to close by the middle of the year, makes sense for both Discover and Allstate, says Nomura analyst Brian Foran.
"For Discover, they have increased deposits $6 billion to $20 billion since 2008," said Foran. "This is in line what they have been doing, which is continuing to add deposits. I believe Allstate has only a billion in deposits compared to insurers like MetLife that have slightly bigger banks, so its decision to exit the business and partner with Discover is a strategic play."
--Written by Maria Woehr in New York.
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