Sallie Mae (SLM), formally SLM Corporation, announced Wednesday that its Board authorized management to pursue separation of the company's existing businesses into two, separate, publicly traded entities -- an education loan management business and a consumer banking business -- to unlock value and enhance long-term growth potential.
In addition, the company said it has appointed John Remondi chief executive officer, effective immediately. Remondi succeeds Albert Lord, Sallie Mae's vice chairman and chief executive officer, who is moving up his plans to retire from the Board of Directors and executive management. Remondi has served as president and chief operating officer since 2011. Prior to that, he served as vice chairman and chief financial officer.
The company said that a strategic plan will create two companies, each initially owned by Sallie Mae's existing shareholders and the leader in its respective business lines. Sallie Mae would form an education loan management business comprised of the company's portfolios of federally guaranteed or FFELP and private education loans, as well as most related servicing and collection activities. This will be the leading education loan portfolio management, servicing and collection company, and Remondi will continue as its chief executive officer.
Sallie Mae's private education loan origination and servicing businesses, including Sallie Mae Bank and the private education loans it currently holds, will operate separately under the Sallie Mae brand. This will be the leading consumer education lending franchise with expertise in helping families save, plan and pay for college. Joseph DePaulo, executive vice president, banking and finance, will lead this business as chief executive officer.
The completion of the separation will be subject to certain customary conditions. The contemplated separation and distribution will not require a shareholder vote. Although Sallie Mae expects the separation of its businesses and related distribution of common stock to be completed within 12 months.
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