Capital One Financial Corp., this year’s top performer in the KBW Bank Index, agreed to buy ING Groep N.V.’s U.S. online bank for $9 billion in cash and stock.
Capital One will pay $6.2 billion in cash and $2.8 billion in stock, giving ING a 9.9 percent ownership stake, Amsterdam-based ING said Thursday in a statement. Capital One said in a separate statement that it would become the fifth-biggest U.S. bank by deposits if it wins control of the largest U.S. online bank.
ING, the biggest Dutch financial-services firm, is under order from the European Union to sell the U.S. unit as a condition for a government bailout during the financial crisis. ING spoke with firms including CIT Group Inc., Ally Financial Inc. and Citigroup Inc.’s private-label credit-card business, people familiar with the matter have said.
“We believe that ING Direct USA is a valuable asset,” Duncan Russell and Marine Collas, London-based analysts at JPMorgan Chase & Co., said in a June 7 report. “It has shown a very strong ability to build deposits, and these deposits have proven to be sticky despite the financial crisis, implying that the model works.”
The deposit boost may help Capital One, which derives more than half its revenue from credit cards, diversify its funding base and allow it to increase mortgage lending after closing a home-loan-origination unit in 2007. The firm also would have to contend with ING Direct USA’s $40.5 billion of mortgage loans and $19.9 billion of mortgage-backed securities, based on the latest data from the Federal Deposit Insurance Corp.
First-quarter profit at Capital One, based in McLean, Va., climbed 60 percent as fewer credit-card borrowers defaulted and the firm released money from an account to cover soured loans.
