Capital One Buying ING Direct USA in $9 Billion Deal

Capital One Financial Corp., which until now was best known for its credit cards, is poised to become a major online banking force.

The Mclean, Va.-based company said Thursday that it will buy ING's U.S. online banking unit for $9 billion in a cash and stock deal.

Under the terms of the deal, Netherlands-based ING Groep will receive $6.2 billion in cash and $2.8 billion in the form of Capital One shares. That will make ING the largest single shareholder in Capital One after the deal closes.

ING will also have the right to be represented by a member of Capital One's board of directors.

Capital One is best known for its portfolio of credit cards. But the company also has retail banking locations in eight states and has offered its own online banking service for about a decade.

ING Direct, based in Wilmington, Del., offers online banking services to 7.7 million customers. The company was launched in 2000 and is now the largest direct bank - a bank without a network of branches - in the country.

Capital One CEO Richard Fairbank called the deal a "game-changing transaction" that will create a "truly national franchise."

He said in a conference call following the announcement that Capital One may open branches in select markets with large numbers of ING customers. That's because local branches are "still the best way to reach customers and build deep relationships," he said.

Fairbank also noted that ING's Sharebuilder online brokerage unit will provide enormous potential for cross-selling with Capital One customers.

The companies said ING Direct will keep its "orange ball" branding and use the ING Direct trademark for a transitional year.

Capital One says it's now the eighth largest bank in the United States based on domestic deposits. After the deal closes, however, it will move into the number five spot. The top four banks by that measure are Bank of America, Wells Fargo & Co., JPMorgan Chase & Co. and Citigroup, according the research group SNL.

The sale is part of ING's restructuring plan that was filed with the European Commission in 2009. ING had to submit the plan in order to receive government support during the financial crisis. ING said the deal will not affect its ING Direct operations in Canada, Spain, Australia, France, Italy, Germany, the United Kingdom and Austria.

Capital One said it will finance the cash portion of the deal through a public equity raise of about $2 billion and debt offerings of about $3.7 billion.

The company expects to incur a charge of $210 million in acquisition costs when the deal closes late this year or in early 2012.

Capital One said it expects to save $90 million from consolidating systems and corporate staff functions. The company also expects to save $200 million annually from consolidating management of the combined deposit portfolio. The deal is expected to add to Capital One's earnings per share in 2012.

The deal is still subject to regulatory approvals in the United States and the Netherlands.

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28 Comments

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B. James Stoddard, M

As soon as CRAPital One lowers our ING Orange Check Savings and ups our Sharebuilder charges, I'm switching to Fidelity.

June 18 2011 at 9:27 AM Report abuse rate up rate down Reply
tom6501

Vey bad for ING customers.

June 17 2011 at 11:55 PM Report abuse rate up rate down Reply
rdins4

I like ING, I don't want to see them bought out.

June 17 2011 at 10:46 PM Report abuse rate up rate down Reply
pkkbh

I have accounts at both Capital One and ING. I wished that this buyout had never happened, but if Capital One has the same principles as ING, and the same interest and the hassle free fees, I am willing to give them a chance. But at the first sight of anything other than what I have become used to at ING, and I will be taking all of my money out. I will put it with American Express. I would not accept anything less from Capital One than I got from ING Direct. I am already panicking. ING Direct asks no specific amount to open an account, and no specific amount to keep in your account. Capital One does. Like I have stated before, one move away from ING principles, and all of my money will be coming out, fast. Capital One is not a loyal bank. Nice Customer Service, but bad principles and rules.

June 17 2011 at 6:24 PM Report abuse rate up rate down Reply
conic

There goes the neighborhood. I can't stand Capital One! I'm closing all my ING accounts (and Sharebuilder through ING) before Capital One starts in with all of the fees!!

June 17 2011 at 5:28 PM Report abuse rate up rate down Reply
Phil

I see others have preceeded my comments with similar remarks ... !

June 17 2011 at 3:39 PM Report abuse rate up rate down Reply
hkrealstat

This is an enourmous mistake! CapitalOne, from experience, both personal and business, is about the most inept corporation being allowed to deal with the public. I am quite certain that their Board contains at least 10 Senior Vice Presidents of Incompetancy.

ING, on the other hand, is the answer of consumers prayers to resolving issues quickly with personnel that care!

June 17 2011 at 3:06 PM Report abuse rate up rate down Reply
hnlmom2

not good! not good! not the best move for ING and their customers!

June 17 2011 at 2:41 PM Report abuse rate up rate down Reply
Studmaster

This is exactly what America needs , not one but two companies that cannot even stand own their own two feet to become one company. It is no wonder that people are so fed up

June 17 2011 at 1:26 PM Report abuse rate up rate down Reply
Rockir David

Decades ago, when a company wanted to increase their bottom line, they made new products or improved their existing line. With research expensive and with a chance it may lead to a dead end, companies no longer have to make improvements or new products, just buy your competition or a totally unrelated company and add their bottom line to yours. Of course this kills jobs left and right. That idiot, Bill Clinton, actually allowed two giants to merge, Exxon and Mobil. At the time Exxon employed 175,000 and Mobil, 125,000. Today, the combined company employs 115,000. Just that one merger cost well over 100,000 jobs.

What ever happened to the Sherman and Clayton anti trust laws?

June 17 2011 at 1:20 PM Report abuse rate up rate down Reply