capital one banking

capital one banking
After ING, Capital One Seeks Credit-Card Deal

The purchase by the McLean, Virginia-based Capital One gives it $80 billion in additional deposits and the bank might look for new assets to fund with those liabilities.

"Its hard to see how this fits without HSBC or another deal," said Michael Taiano, a managing director at Sandler O'Neil & Partners.

To be sure, not every expert was sure Capital One would look to rush into a deal. The bank needs to digest the acquisition and might want to take time before completing another. And Capital One may also have secured bonds known as asset-backed securities coming due soon and might use deposits to pay off that debt

Capital One projects the ING deal will create an internal rate of return above 20 percent and bolster earnings per share as soon as 2012.

"The big question is can they get to their internal return projections on this deal? They have some pretty ambitious targets," said Chris Marinac, bank analyst with FIG Partners.

During the analyst call announcing the deal, Capital One Chief Executive Richard Fairbank said the company did not need to do another deal to justify this purchase.

"I really want to say this deal stands on its own," he said, while declining to discuss any bid for HSBC's cards unit.

Integration Risks

Any merger carries the risk of integrating two businesses, which can create headaches. That could prevent another deal soon, an investor said.

But other experts noted that Capital One could integrate ING Direct USA fairly painlessly

Both banks use software created by the same company, said Bart Larter, a senior vice president at consulting firm Celent, who specializes in financial services technology.

During a conference call announcing the deal, Capital One executives noted they will work to avoid alienating ING customers.

"We're certainly not going to rush anything," said Fairbank, noting the company can continue to use the ING Direct name for more than a year and can continue to use the company's orange-themed account names.

But ING customers should still expect changes.

"The experience will be different," said David Albertazzi, a senior analyst with Aite Group. "But the key is not to overwhelm ING customers that are used to the clean, simple interface with the bank."

Albertazzi said Capital One would be wise to integrate large portions of ING Direct's online model into its own approach of offering credit cards, auto loans and other consumer loans

from - http://www.cnbc.com/id/43445095/After_ING_Capital_One_Seeks_Credit_Card_Deal