Capital One's Fairbank Ramps Up 'Empire Building' With ING Deal

Capital One Financial Corp. (COF) Chief Executive Officer Richard D. Fairbank, who’s making the largest U.S. banking acquisition since 2008, has built the Virginia- based credit-card lender into one of the nation’s biggest consumer-financial companies.

Fairbank, Capital One’s CEO since it became an independent company in 1994, announced the purchase of ING Direct USA for $9 billion yesterday. The deal, following the $14.6 billion purchase of North Fork Bancorp in 2006, would make Capital One the sixth-largest bank by deposits, up from seventh.

“This is empire building at its best,” said Michael Taiano , a Sandler O’Neill & Partners LP analyst in New York, who added that his view of the deal improved amid speculation that Capital One will acquire other assets to go with ING’s deposits. “There is some status that comes with being a big bank.”

The deposit boost may help McLean, Virginia-based Capital One, which derives more than half its revenue from credit cards, to diversify its funding base and acquire a portfolio of assets, analysts said. Capital One will pay $6.2 billion in cash and $2.8 billion in stock, giving ING a 9.9 percent ownership stake, the companies said in statements.

“I would suspect this would tie together with an acquisition of a loan portfolio,” said Jonathan Hatcher, a credit strategist at Jefferies Group Inc. in New York who covers financial companies.

Fairbank transformed Capital One through a succession of deals. The purchase of North Fork added more than $35 billion in deposits and catapulted the lender into the top 10 U.S. banks. He also made a $4.9 billion acquisition of Hibernia Corp. in 2005 and in 2008 agreed to a $525 million deal for Chevy Chase Bank. With the ING purchase, Capital One gains access to 7 million customers.

“Capital One is one of a handful of banks that’s breaking away from the pack by building a very large customer base,” Fairbank said in the conference call. “ING Direct offers a dramatically more efficient way for us to get national reach and establish a strong national banking franchise.”

The acquisition may also allow the company to tap into what it calls a younger and more affluent clientele. ING uses the Internet to attract customers and has just seven U.S. outlets, which are modeled after coffee shops, according to its website . The ING Direct Cafes provide coffee, free Internet access and baristas who know about the bank’s offerings.

Brand Consultants | Building A Successful Brand | A Visual Identity

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