Capital One to buy ING's US online banking unit

June 17, 2011 | 09:00
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Capital One will buy the US online banking unit of ING for $9 billion, making the Virginia-based lender the fifth-largest bank in the United States in terms of deposits, the two banks said Thursday.

The deal, one of the largest bank acquisitions in the United States since the 2008 financial crisis, is expected to close in late 2011 or early 2012 pending approval by US and Dutch regulators, Capital One said.

"It is a rare occurence in the game of banking, a game-changing transaction," Richard Fairbank, chairman and chief executive of Capital One, told reporters after the deal was announced.

"You haven't seen a lot of bank merger and acquisitions of late," Fairbank added.

Capital One will buy ING Direct USA for about $6.2 billion in cash and $2.8 billion of stock. As a result, Amsterdam-based ING will become the largest single shareholder in Capital One, with a 9.9 per cent stake.

After the deal closes, Capital One will become the fifth-largest depository institution and the leading direct bank in the United States, the US bank said in a statement.

ING clarified that the deal would only affect ING Direct USA and not its online banking units in Canada, Europe and Australia, where it would focus its efforts going forward.

"Although I regret that ING Direct USA will no longer be a part of ING, I am very pleased that we have found in Capital One a good home for our customers and employees," ING Group chief executive Jan Hommen said in a separate statement.

ING has been looking to sell off ING Direct as it seeks to raise funds to pay off the billions of euros it owes the Dutch government from its bailout amid the global financial meltdown.

ING accepted a 10-billion-euro ($14.2 billion) cash injection from the Dutch government in October 2008 as financial markets reeled from the Lehman Brothers bankruptcy.

ING Direct USA was launched in September 2000 and is now the largest direct bank in the United States, with 7.7 million customers, according to ING.

Following the acquisition, the online bank will retain brand attributes such as its trademark "orange ball," ING said.

"We'll continue to use the famous orange brand," Fairbank said.

Based in McLean, Virginia, Capital One is one of the largest US credit card issuers and has more than 1,000 retail banking branches in the eastern and southern United States.

The US bank said it would need to raise about $2 billion in equity and $3.7 billion in debt to finance the deal.

AFP

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