Teachers Insurance & Annuity Association of America is among the latest insurance companies to announce a divestiture of its bank business with the planned sale of TIAA Bank.
Under the deal announced Nov. 3, TIAA FSB will sell the bank to financial services investors, funds managed by Bayview Asset Management LLC, Reverence Capital Partners LLC, Sixth Street Specialty Lending Advisers LLC, Stone Point Capital LLC and Warburg Pincus LLC. TIAA FSB is owned by TIAA FSB Holdings Inc. whose insurance holding company is TIAA.
U.S. insurer-owned banks have the potential to capitalize on rising interest rates, but they are also facing new regulation with the Federal Reserve adopting a new supervisory framework for depository institution holding companies significantly engaged in insurance activities.
State Farm Mutual Automobile Insurance Co.'s sale of State Farm Bank deposits and credit card accounts to U.S. Bancorp took place in 2020 and saw $11.2 billion in transferred deposits.
Among the other notable divestitures were Omaha Financial Holdings Inc.'s sale of Mutual of Omaha Bank to CIT Group Inc. in a deal announced Aug. 13, 2019, and completed Jan. 1, 2020, and MetLife Inc.'s sale of MetLife Bank NA deposits to GE Capital Retail Bank, now Synchrony Bank, in a transaction announced Dec. 27, 2011, and completed Jan. 11, 2013.
The divestiture of Mutual of Omaha Bank included $6.79 billion in transferred deposits, and the sale of MetLife Bank deposits involved $7.0 billion in transferred deposits.
TIAA's rationale
The decision to sell TIAA Bank aligns with TIAA's long-term strategic plan to refocus on its retirement business and its asset manager, Nuveen Investments Inc., the company noted in a news release announcing the deal.
The move came more than a year since Roger Ferguson Jr. retired as president and CEO of TIAA March 31, 2021. Ferguson oversaw the company's launch of full-service banking operations and the acquisition of EverBank, now TIAA Bank, during the previous decade.
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The rankings
TIAA FSB Holdings is one of the seven banks controlled by holding companies significantly engaged in insurance activities. The company had $38.58 billion in total assets at June 30.
The largest among the seven is United Services Automobile Association unit USAA Federal Savings Bank, with $114.53 billion in assets at June 30.
