The U.S. Federal Reserve Board, after delaying a decision twice in a week, unanimously approved Capital One Financial Corp.'s (COF) plan to buy ING Groep NV's (ING, INGA.AE) U.S. online-banking business, sending a signal that banks can expand even in this new era of heightened scrutiny.

"The Board has concluded that consummation of the proposal can reasonably be expected to produce public benefits that would outweigh any likely adverse effects," said the Fed in an order released late Tuesday.

It added that it expects Capital One to ensure that its "risk-management framework and methodologies, including its compliance functions, are commensurate with its new size and complexity."

Capital One, the nation's seventh-largest bank by assets according to data from SNL Financial, announced in June its plan to buy ING Direct USA, an Internet bank known for its orange lion logo and high-interest savings accounts. Immediately, consumer groups assailed the proposal as one that would create a risky megabank that could jeopardize the U.S. economy. Community banks urged Fed officials to block the deal as well as any other bank deals that could make the financial system riskier.

The Fed was slated to vote on the proposal on Feb. 8, but postponed the meeting. This week, the Fed met but delayed a decision, all this adding suspense about the deal's fate. "Last week's delay ... and today's non-decision are unsettling," Keefe Bruyette & Woods analyst Brian Gardner said Monday.

But eight months later, after Capital One steadily defended the deal and promised to add thousands of jobs and invest billions of dollars in low-income communities, the transaction has become the biggest bank deal to win approval from the Federal Reserve since the 2010 Dodd-Frank financial overhaul law was passed.

The $9 billion acquisition bolsters Capital One's transformation from a credit-card lender into a large, full-service national bank.

"I think the ING deal is going to prove to be one of the strategically most transformational things that's ever happened to this company," Capital One Chief Executive Richard Fairbank said at a financial conference last week. Fairbank said it would only take "a few days" after Fed approval to close the deal.

The bank is also aiming to complete a separate $2.6 billion plan to buy the U.S. credit-card business of HSBC Holdings PLC (HBC, HSBA.LN, 0005.HK) in the second quarter.

   -By Maya Jackson Randall, Dow Jones Newswires; 202-862-6687, maya.jackson-randall@dowjones.com
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