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interestrateripoff

Capital One To Buy Ing Online Bank

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http://www.bbc.co.uk/news/business-13803654

Capital One says it plans to buy the US internet banking arm of ING in a move that will make it the seventh largest US bank by assets.

Capital One, best known for its credit cards, will pay $9bn (£5.5bn) in cash and shares - $6.2bn of that in cash.

The deal will also leave the Dutch banking and insurance giant with a 9.9% stake in Capital.

The move is the latest step in Capital One's plan to branch out from its credit card lending roots.

It will raise $2bn in new capital and $3.7bn in new debt in order to finance the transaction.

Or is it Capital one's rescue plan to turn itself into a bank and get access to unlimited taxpayer cash via the Fed? Or does it already quality to access the Fed as a credit card company?

How's Capital One's credit card business doing?

Edited by interestrateripoff

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This is and odd move as about two years ago Capital One sold its savings account business to Skipton BS, as it was not their core business. Perhaps now they need access to deposits again?

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This is and odd move as about two years ago Capital One sold its savings account business to Skipton BS, as it was not their core business. Perhaps now they need access to deposits again?

I'd guess it's about scale. ING US is big - 80 billion deposits IIRC - whereas Capital One's start-up UK operation was small and, when they were trying to get it going, up against Icesave and the like who were paying unrealistically high rates of interest. Also, ING is a forced sale so quite likely they they think they're getting a bargain.

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What makes you think it needs a rescue plan? Its numbers look fairly solid to me:

http://www.google.com/finance?q=NYSE:COF&fstype=ii

Not that I doubt the figures but wouldn't Enron's figures have looked good? What about Bear Stearns did there figures look good? How about Lehmans did there figures look good?

Nothing makes me think they need a rescue plan, I'm just being suspicious.

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Wouldn't anyone buy a bank if they could?

You can put your hand directly into taxpayer pockets.

It doesn't matter how much it costs, just ask RBS. They don't have to pay how much the overspent it's us that are doing that.

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Not that I doubt the figures but wouldn't Enron's figures have looked good? What about Bear Stearns did there figures look good? How about Lehmans did there figures look good?

Nothing makes me think they need a rescue plan, I'm just being suspicious.

Well, the possibility of mass hidden fraud aside, I can't see anything in their numbers that look suspicious. They're a boring old lending operation from what I can see:

https://materials.proxyvote.com/Approved/14040H/20110316/AR_83117/HTML2/default.htm

Their only derivatives exposure seems to be for hedging purposes:

https://materials.proxyvote.com/Approved/14040H/20110316/AR_83117/HTML2/capital_one-ar2010_0053.htm

Bear Stearns & Lehmans were a totally different kettle of fish - their balance sheets were entirely incomprehensible. This lot on the other hand are straightforward: loans of various types on one side and then various types of deposits and funding from the usual sources. If you wanted to be really cynical you might speculate they're in a Northern Rock situation and are underestimating loan-loss provisions but, since they came through 2008 relatively unscathed, I'd say that's unlikely.

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Well, the possibility of mass hidden fraud aside, I can't see anything in their numbers that look suspicious. They're a boring old lending operation from what I can see:

https://materials.proxyvote.com/Approved/14040H/20110316/AR_83117/HTML2/default.htm

Their only derivatives exposure seems to be for hedging purposes:

https://materials.proxyvote.com/Approved/14040H/20110316/AR_83117/HTML2/capital_one-ar2010_0053.htm

Bear Stearns & Lehmans were a totally different kettle of fish - their balance sheets were entirely incomprehensible. This lot on the other hand are straightforward: loans of various types on one side and then various types of deposits and funding from the usual sources. If you wanted to be really cynical you might speculate they're in a Northern Rock situation and are underestimating loan-loss provisions but, since they came through 2008 relatively unscathed, I'd say that's unlikely.

I'm just being mischievous, but in the current climate don't you think it's understandable?

If you where wanting to guarantee your operations ensuring access to Fed money would be a business goal, the only way to do that is to become a bank.

I'm sure it's just good old expansion, and at a price they couldn't resist.

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I'm just being mischievous, but in the current climate don't you think it's understandable?

Sure, totally, it's always interesting to ask why a company might want to do something... I guess I get a little bit irritated by all the 'end of the world' type posts on here sometimes. I feel a little balance is in order from time to time.

If you where wanting to guarantee your operations ensuring access to Fed money would be a business goal, the only way to do that is to become a bank.

I'm sure it's just good old expansion, and at a price they couldn't resist.

They're already an FDIC insured bank but, yes, adding 80B of deposits at a knock-down price is quite likely the driver.

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Sure, totally, it's always interesting to ask why a company might want to do something... I guess I get a little bit irritated by all the 'end of the world' type posts on here sometimes. I feel a little balance is in order from time to time.

They're already an FDIC insured bank but, yes, adding 80B of deposits at a knock-down price is quite likely the driver.

I'm on about access to Fed Discount Window.

http://www.frbdiscountwindow.org/discountwindowbook.cfm?hdrID=14&dtlID=43

4. Eligibility to Borrow

By law, depository institutions that maintain reservable transaction accounts or nonpersonal time deposits (as defined in Regulation Doffsite link) may establish borrowing privileges at the Discount Window. Eligibility to borrow is not dependent on or related to the use of Federal Reserve priced services.

U.S. branches and agencies of foreign banks that hold reserves are eligible to borrow under the same general terms and conditions that apply to domestic depository institutions. Foreign banks with more than one branch or agency operating in the United States may have access to the Discount Window in more than one Reserve District. Any Discount Window loans to those branches or agencies will be made by the Reserve Banks where the borrowing branches or agencies maintain accounts. Reserve Banks coordinate and monitor lending to such branches and agencies on a nationwide basis.

Bankers' banks, corporate credit unions, and other financial institutions are not required to maintain reserves under Regulation Doffsite link, and so do not have regular access to the Discount Window. However, the Board of Governors has determined that such institutions may obtain access to the Discount Window if they voluntarily maintain reserves.

Current Interest Rates Primary Credit 0.75%

Secondary Credit 1.25%

Seasonal Credit 0.15%

Fed Funds Target 0 - 0.25%

Getting access to cash at this level of interest for a credit card company would possible be profitable.

https://www.capitalone.com/

Loans APR

Auto Loans as low as 2.99%* Click to go to our Auto Loan and Car Payment Calculator

Auto Refinancing as low as 3.69%* Click to go to our Auto Loan and Car Payment Calculator

Capital One Credit Cards

Certainly getting access to the Fed window might even make those auto loans profitable!

Edit to add:

The other option is they are trying to make themselves too big to fail.

Edited by interestrateripoff

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Getting access to cash at this level of interest for a credit card company would possible be profitable.

What makes you think they don't already have access to it? They're a full service retail bank in the US and have been for quite a while. I used to live a few doors down from one of their branches in New York back in 2003 IIRC. E.g. banking products (including deposit and checking accounts of various types):

http://www.capitalone.com/directbanking/?linkid=WWW_Z_Z_Z_Z_H1_03_T_SP1

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What makes you think they don't already have access to it? They're a full service retail bank in the US and have been for quite a while. I used to live a few doors down from one of their branches in New York back in 2003 IIRC. E.g. banking products (including deposit and checking accounts of various types):

http://www.capitalone.com/directbanking/?linkid=WWW_Z_Z_Z_Z_H1_03_T_SP1

Looks like it's the too big to fail option. I had no idea at what point they branched out into retail banking, thanks for the info.

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  • 284 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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