Capital One has announced this week that it will pay $9 billion for ING Direct USA, amounting to $6.2 billion in cash and $2.8 billion in stock. The deal will give ING an almost 10 percent stake in the bank and will make it Capital One’s largest shareholder, according to reports on the Wall Street Journal. Capital One will raise $2 billion in equity and $3.7 billion in debt before the deal closes later this year; shares closed at $49.
Currently, Capital One is the ninth-largest bank in the U.S. by deposits and the addition of ING would allow the bank to jump to the No. 5 spot, putting it ahead of Bank of America, Wells Fargo, JP Morgan Chase and Citigroup. Capital One founder, Chairman and Chief Executive Richard Fairbank believes the acquisition of ING Direct will be a “game-changing transaction.”
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ING is in the middle of a restructuring plan forced by the $10 billion Euro state bailout that came out of the 2008 financial crisis. ING Direct USA also brings with it $92 billion in assets, including about $40 billion in mortgage loans.
The online bank was established in 2000 and has attracted more than 7 million customers. Capital One says it sees $90 million in cost savings from combining the two banks and also believes that it can save $200 million each year while it cuts back on efforts to grow its deposit base.