Industries

Capital One goes online in latest move

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Print this page by Robert Powell

Capital One Financial Corp. has a new answer to the question “What’s in your wallet?”

By adding ING Direct USA to its wallet, McLean-based Capital One, a company best-known for credit card commercials featuring raucous Vikings, will become the nation’s biggest online banker.

In the $9 billion deal announced in mid-June, Capital One will pay Dutch banking company ING Groep NV $6.2 billion in cash and $2.8 billion in Capital One shares. ING would hold 9.9 percent of Capital One shares and have the right to name one member to the company’s board.

“The acquisition of ING Direct is a game-changing transaction that delivers attractive deal economics immediately and compelling long-term strategic value,” Richard D. Fairbank, Capital One’s chairman and CEO, said in a statement.

The deal would give Capital One 7 million, mostly young online customers and move the company up the ladder of the nation’s biggest banks, from eighth to fifth in terms of total deposits.

Some analysts see the acquisition as a prelude to other major bank deals, but others disagree.

“I think it is going to very much alter their outlook on acquiring traditional banks,” says David West, an analyst with the investment firm Davenport & Co. in Richmond.  He believes having ING Direct will take the pressure off Capital One to buy major banks, expanding instead through online operations and the acquisition of small, boutique banks.

ING Direct was on the market because the European Commission ordered its parent company to sell the business as a condition for receiving government aid during the 2008-09 financial crisis.

The transaction is the latest move in Capital One’s transformation from a credit-card company spun off from a Richmond-based regional bank, Signet Banking Corp., in 1994. (Signet later was acquired by First Union Corp., which eventually became Wachovia.)

Since 2005, Capital One has acquired three major banking companies: Hibernia Corp., North Fork Bank and Chevy Chase Bank. It now has 1,000 branches in six states and the District of Columbia, including 250 in the Washington area.

Capital One announced late last year that it planned to hire 1,000 workers in Virginia this year, bringing its total employment in the commonwealth to 10,400. Almost 8,000 employees work in the Richmond area.

ING Direct, founded in 2000, is based in Wilmington, Del., with offices in Los Angeles, Seattle and St. Cloud, Minn. As an online bank, ING Direct has no branches, but it offers seven “cafés” where customers can talk to bank employees, use its computers and get a cup of coffee.

West expects Capital One to be careful in integrating ING Direct, not quickly changing signs or rebranding the online bank. “They’ve got to acknowledge that what ING did here with the direct bank was pretty remarkable.


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