American International Group Inc. (AIG) will return funds to customers at its banking unit and shut their accounts amid a retreat from deposit-taking as the Dodd-Frank Act places limits on insurers.
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 deposit-taking banks. MetLife Inc. (MET), Hartford Financial Services Group Inc. and Allstate Corp. have sold deposits or retreated from banking as regulators increase oversight.
Robert Benmosche, the chief executive officer of New York-based AIG, said last year that the insurer was weighing whether to shutter its bank. The Wilmington, Delaware-based bank had 30 employees and $920.5 million in assets as of March 31, according to Federal Deposit Insurance Corp. data. It offered products including mortgages and certificates of deposit through its website and over the phone.
The unit "recently received regulatory approval to convert AIG Bank to a trust-only organization," Robert Dushkewich, bank services manager, said in the letter. "All accounts will be automatically closed."