Capital One acquires ING US online banking unit
June 16, 2011‐ McLean, Virginia, USA
Capital One and ING Groep announced that the former is buying the US online banking unit of the later for $9 billion. ING Direct USA was launched in September 2000 and soon, with 7.7 million customers, became the largest direct bank in the United States. But with ING planning to repay part of the $14.2 billion it took from the Dutch government for the bailout during the global financial meltdown, ING was looking for a good partner.
With this acquisition, Capital One will become the fifth largest bank in the United States in terms of deposits. The McLean, Virginia-based lender has struck the deal because it is a game-changing transaction, according to its Chairman and Chief Executive Richard Fairbank. This is the biggest banking acquisition since the financial crisis of 2008. The deal was expected to close by the end of 2011 or early 2012 after the approval of US and Dutch regulators are taken.
ING says the deal is limited to ING Direct USA and not the online banking units in Canada, Europe and Australia. Capital One will continue to use the retail branding attributes of ING Direct US such as the trademarked orange ball.
Capital One is one of the largest credit card companies in the US. The company is constantly making move to get a sizeable share of the US Banking business and this deal is one step towards that. Back in 1999, Capital One acquired Chevy Chase Bank which makes the bank grow by 250 branches instantly. Meanwhile, Capital One is saying it needs to raise funds, $2 billion in equity and $3.7 billion in debt, finance the deal. It will pay $6.2 billion in cash and approximately $55.9 million Capital One shares, valued at $2.8 billion. Based on a 10-day average of closing prices for the period ending June 15, the share value is at $50.07.
Morgan Stanley and Barclays Capital were both advisors to Capital One in the deal.
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