Principal Financial Group won government approval to add banking products to its already extensive financial services offerings.
The Office of Thrift Supervision approved the $67 billion-asset insurance company's application for a federal thrift charter late Friday. The Des Moines-based insurer plans to use its thrift to market credit and debit cards, certificates of deposit, checking accounts, and other products to its 10 million customers and 17,000 employees across the country.
Steven J. Ollenburg, president of the newly chartered Principal Bank, Des Moines, said owning a thrift will allow the insurance giant to become a "one-stop shop" financial services firm.
"Principal's size and the variety of businesses it engages in gives us the potential for a vast amount of leveraging off of our affiliate relationships," Mr. Ollenburg said in an interview Monday. "We are very excited."
Mr. Ollenburg, the former president of Liberty Savings Bank in Des Moines, said he expects the thrift to be up and running before the end of March.
Principal already owns a mutual fund company, a broker-dealer, and a mortgage banking unit, Mr. Ollenburg said. In addition, the firm is one of the nation's largest administrators of 401(k) plans.
By chartering a thrift, Principal joins insurers such as Prudential Insurance Company of America, Amerus Life Insurance Co., and Acacia Mutual Life Insurance Co., which have been operating thrifts for years.
However, Principal is significant because it is the first insurer to win regulatory approval since Congress began debating legislation that would eliminate the thrift charter. Six other insurers have applications pending at the OTS. The next approval could come as early as this week; the agency has until Nov. 24 to rule on a request filed by Travelers Group Inc.
Because Principal plans to cross-market its banking, insurance, and securities products, OTS put several restrictions on the new thrift.
According to the Nov. 14 approval order, the thrift-which will offer its products solely through the mail, over the phone, and through the Internet- may not begin cross-marketing until it gets approval from the agency's midwestern regional office.
Specifically, 30 days before beginning any cross-marketing campaign, the insurer must provide the agency with copies of employee training standards, including any disclosures that salespeople will provide to customers.
In addition, the agency may test Principal Bank's marketing disclosures by "having its examiners periodically, and without identification as OTS employees, solicit the call center."
