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How Will Synchrony Treat Savers After IPO?

Synchrony Financial went public yesterday amidst the usual financial media hoopla.

Unfortunately, it didn’t pick a particularly good day for it. With the Dow Jones Average down 317 points (1.88%), Synchrony (ticker symbol: SYF) ended trading unchanged at its initial offering price of $23 per share.

The customary first-day IPO price pop didn’t materialize.

As we reported in June, the IPO is the first step in the divestiture by General Electric of its retail banking business.

According to the offering prospectus, GE (which will still own about 84% of Synchrony post-IPO) hopes to complete the disposition of all of Synchrony by late 2015.

The prospectus describes Synchrony Financial as “one of the premier consumer financial services companies” and “the largest provider of private-label credit cards” in the United States

Its principal unit is Synchrony Bank (formerly named GE Capital Retail Bank).

Of course, as an investor in government-insured CDs and other deposit products, I’m interested in the future direction of Synchrony Bank more than in the stock price of its parent.

But the company’s 300-plus-page prospectus, aimed at marketing stock and not deposit accounts, doesn’t tell us much about its future plans for the bank’s Optimizer+Plus “suite” of products.

These currently feature competitive rates for certificates of deposit, savings accounts and money market accounts, including the top 12-month and 60-month CD rates on our CD Rates Leaderboard and a good odd-term deal on 15-month CDs.

However, prospectus snippets do offer some hope the bank’s offerings will remain at least as competitive as they are now.

For example, noting the ever-increasing popularity of direct versus branch banking among consumers, Synchrony says, more than once, that it intends to introduce “new deposit and credit products and enhancements to our existing products.”

Although specifically referencing things like online checking accounts and mobile banking, and not higher deposit rates, the prospectus suggests, at least to me, that Synchrony will continue to offer what it calls “attractive rates” to compete effectively for new deposits and to maintain existing deposits.

Synchrony also discloses that it intends to reduce the proportion of its deposit base represented by brokered deposits. This is a positive, indicating to me the bank will need to stay rate-competitive in the online banking world, where offered yields tend to be higher than in the brokered CD market.

I may be reading with rose-colored glasses, though. What will actually happen remains to be seen.

After all, the financial analysts and TV talking heads – who influence so many management decisions at publicly-traded companies – really don’t give a fig about bank depositors.

So don’t break out the bubbly just yet.

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