Capital One Financial Corp. rose the most in seven months after getting approval from the Federal Reserve to purchase ING Groep NV’s U.S. online bank.
Capital One advanced 3.3 percent to $49.56 at 11:46 a.m. in New York and traded as high as $50.02, its best level since July 22. The McLean, Virginia-based firm is buying ING Direct USA for $9 billion, displacing Minneapolis-based U.S. Bancorp as the nation’s fifth-largest lender by deposits.
The transaction, announced in June and approved by the Fed yesterday, will be completed in days, Tatiana Stead, a Capital One spokeswoman, said in an e-mailed statement. Capital One will get about $80 billion in deposits and more than 7 million customers by adding ING’s online bank to its traditional branch network and credit-card and auto-lending businesses.
“The ING deal is going to prove to be one of the strategically most transformational things that’s ever happened in this company,” Chairman and Chief Executive Officer Richard Fairbank said at a Feb. 8 investor conference in Miami. “It is a very low-cost way for Capital One to become a national player.”
The acquisition is the first reviewed by the Fed under the Dodd-Frank Act, which requires the central bank to consider whether mergers will result in “greater or more concentrated” risks to the financial system.
Regulators held three hearings to allow public input on the purchase and extended the comment period amid opposition from advocates for consumer rights and affordable housing, including the National Community Reinvestment Coalition.
The NCRC, in a September letter to Fed Chairman Ben S. Bernanke and Treasury Secretary Timothy F. Geithner, said that the ING deal threatens the goals of Dodd-Frank.
The transaction will create another “too-big-to-fail” institution and should only be allowed if Capital One implements a “meaningful plan showing a true commitment to do more for the public,” John Taylor, the coalition’s CEO, said at a Sept. 20 hearing in Washington.
“We’re extremely disappointed in today’s decision,” Taylor said yesterday in an e-mailed statement. The organization is considering its options to challenge the approval, he said.
Capital One pledged to make $180 billion in new community-development loans and investments over the next decade, including $28.5 billion in home lending to borrowers characterized as low- and moderate-income. The bank also announced plans to hire thousands of workers.
ING, the biggest Dutch financial-services firm, was ordered by the European Union to sell the U.S. unit as a condition of its government bailout during the financial crisis. The agreement will give ING a seat on Capital One’s board.
In August, Capital One agreed to purchase HSBC Holdings Plc’s U.S. credit-card portfolio. That transaction is set to be completed in the second quarter.