Fed to Decide ‘Soon’ on Capital One-ING Deal After Eight Months of Delays
The U.S. Federal Reserve said it will soon decide whether to approve Capital One Financial Corp. (COF)’s planned $9 billion purchase of ING Groep NV (INGA)’s U.S. online bank, eight months after the deal was announced.
“The board considered the application at its meeting this afternoon and expects to issue a decision soon,” the central bank said yesterday in a statement.
The Fed held three hearings to allow public input and extended the comment period amid opposition to bank mergers from advocates for consumer rights and affordable housing. The deal would make McLean, Virginia-based Capital One the fifth-largest lender by U.S. deposits. ING aims to repay aid from the Dutch state with the proceeds, and is under European orders to divest the bank before the end of 2013 as a condition of its bailout.
“This is a thoughtful and deliberate process and we appreciate the thoroughness of the Fed’s review,” Tatiana Stead, a Capital One spokeswoman, said in an e-mailed statement. “We look forward to their final decision and the positive impact the acquisition will have on our customers, associates, shareholders and our communities.”
The proposed purchase is the first the Fed is considering under a provision of the Dodd-Frank Act that requires the central bank to consider whether mergers will result in “greater or more concentrated” risks to the financial system.
Laura DiLello, a spokesman for ING Direct, referred inquiries to Stead.
Capital One, led by Chairman and Chief Executive Officer Richard Fairbank, climbed 0.4 percent to $48.49 in New York trading yesterday. The shares have fallen 1 percent since the ING deal was announced on June 16, trailing the 7 percent gain by the Standard & Poor’s 500 Index during that time.
“It’s an overhang on the company’s shares until there’s some finality,” Sanjay Sakhrani, an analyst with KBW Inc. who has an “outperform” rating on Capital One, said in a phone interview yesterday. “I’m not sure we can read anything into this. We’re in uncharted territory.”
“I have never known the Federal Reserve to take this long in issuing a decision,” John Taylor, the coalition’s CEO, said today in an e-mailed statement. “Today’s vote postponement is encouraging news. This is a small sign that perhaps the era of rubberstamping bank mergers is over.”
ING plans to use the proceeds from the ING Direct USA sale to help repay part of the 3 billion euros ($4 billion) it still owes the Dutch state by May, CEO Jan Hommen said last week.
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