Capital One Wins Bid For ING's US Online Bank - Sources
June 16 2011 - 12:44PM
Dow Jones News
ING Groep NV (ING, INGA.AE) decided to sell its U.S. online
banking business to Capital One Financial Corp. (COF), according to
people familiar with the matter.
The announcement of the deal, valued at $9 billion, will be
soon. Capital One will pay $6.2 billion in cash and $2.8 billion in
stock for ING Direct USA, which will give ING an about 10%
ownership stake in the McLean, Va., bank, according to a person
with direct knowledge of the matter.
Capital One will raise $2 billion in fresh capital before the
deal closes, expected later this year, this person said.
Capital One is the ninth-largest bank in the U.S. by deposits,
and adding ING Direct would make it No. 6, ahead of U.S. Bancorp
(USB). Bank of America Corp. (BAC) is No. 1.
As Dow Jones previously reported, the bank has also made a
complementary bid for HSBC Holdings PLC's (HBC, HSBA.LN 0005.HK)
U.S. credit card business, according to people familiar with the
matter. The bidding for HSBC's cards business is in the early
stages. Capital One could fund the expanded card business with the
ING deposits, allowing it to grow at a time when consumers are
reluctant to take on new debt and the economy is sputtering.
ING Direct is one of the largest and most successful online
deposit gatherers, with $82 billion of deposits and seven million
customers that proved more loyal to the online bank than banking
analysts and consultants had originally expected when internet
banking emerged as a stand-alone banking strategy just over 10
years ago.
Capital One, meanwhile, has been transforming itself from a
credit card lender to a bank to use more stable deposits to fund
its loans, and created its own online bank. It since bought three
traditional banks.
The company has been bidding for ING Direct along with General
Electric Co. (GE), according to people familiar with the matter.
But Capital One was more willing than the industrial conglomerate
to take on mortgages and mortgage-backed securities that are part
of the online bank, those people said.
Capital One isn't expected to keep the mortgage assets, but its
willingness to take them on made its bid less complicated than GE's
offer, according to people familiar with the matter.
ING, of Amsterdam, was ordered by the European Commission to
sell the business by 2013 as a condition for government aid it had
received during the financial crisis. The forced disposal is part
of a wider restructuring plan.
-By Matthias Rieker, Dow Jones Newswires; 212-416-2471;
matthias.rieker@dowjones.com
--Anupreeta Das and Gina Chon contributed to this article.
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