NEWARK, Del. (AP) -- Sallie Mae plans to split into two separate, publicly traded companies. The student loan giant also named John Remondi as its CEO.
Sallie Mae, formally named SLM Corp., said Wednesday that the two separate companies — an education loan management business and a consumer banking business — would help unlock value and boost its long-term growth potential.
The education loan management business would include the company's portfolios of federally guaranteed and private education loans, as well as most related servicing and collection activities. Remondi will continue as its CEO.
The principal assets of the business are likely to include approximately $118.1 billion in federally guaranteed loans, $31.6 billion in private education loans, $7.9 billion of other interest-earning assets; and a loan servicing business with about 10 million student loan customers. This includes 4.8 million customer accounts serviced under Sallie Mae's contract with the U.S. Department of Education.
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. Joseph DePaulo, executive vice president of banking and finance will serve as the consumer education lending franchise's CEO.
The consumer banking business' assets are likely to include about $9.9 billion of assets made up mostly of private education loans and related origination and servicing platforms; cash and other investments and the Sallie Mae Upromise Rewards program.
The two separate companies will initially be owned by Sallie Mae stockholders, but the separation of the businesses does not require a shareholder vote.
Newark, Del.-based Sallie Mae anticipates the split, if given final approval by its board, could be completed within 12 months.
Remondi will succeed Albert Lord, who is retiring earlier than initially planned. Lord is also stepping down as vice chairman. Remondi has served as president and chief operating officer since 2011 and was CFO and vice chairman before that.
Remondi's appointment is effective immediately.
Shares of SLM added 27 cents to $23.25 in premarket trading.