H&R Block Plans to Shed Banking Unit
Oct 10th 2012 10:12AM
H&R Block Inc. (NYSE: HRB) fell 6% in early trading after announcing that it is exploring strategic alternatives for its banking unit. The tax-preparation company wants to avoid new capital requirements under the Dodd-Frank Act by no longer being regulated by the Federal Reserve as a savings and loan holding company.
H&R Block CEO Bill Cobb said:
We are a tax preparation company that offers financial products and related services as an added value to our clients, but operating within the regulatory constraints of these proposed rules would be cumbersome.
Goldman Sachs Group Inc. (NYSE: GS) is advising H&R Block on its options.
The company has divested its brokerage and mortgage-lending operations as part of this efforts to return focus back to its core tax-preparation business.
Insurer MetLife Inc. (NYSE: MET) has also said it plans to sell its banking business to General Electric Co. (NYSE: GE) in order to shed its bank-holding-company status and avoid the capital constraints imposed by the Federal Reserve.
Shares of H&R Block fell from the opening price of $17.00 to as low as $16.53 in early trading, erasing about three-weeks worth of gains. The 52-week range is $14.02 to $18.04.