CD Rates Summary - January 18, 2022
Federal Reserve, the Economy and CD Rate Forecast - January 18, 2022
Capital One to Acquire ING Direct - Effect on Savers?
In a press release on Thursday Capital One announced that it will acquire ING Direct from ING Groep. News reports that ING was preparing for a sale started last March. There had been reports of several other companies looking into this acquisition including Citigroup and Ally. It came down to GE and Capital One, but Capital One was more willing than GE to take on ING Direct's mortgages and mortgage-backed securities.
The Europe Union required ING to divest ING Direct USA by the end of 2013 due to the government aid ING had received during the financial crisis. The divestment was part of a restructuring plan first announced in October 2009.
According to the press release, the deal is expected to close in late 2011 or early in 2012.
Also mentioned in the press release is that this acquisition will move Capital One from the 8th largest bank in the U.S. based on deposits to the 5th largest. This will put them below the big 4 (Bank of America, Chase, Wells Fargo and Citi) and above US Bank, PNC and Bank of New York Mellon. Actually, based on March 31, 2011 FDIC data, the combined bank will have total deposits of $212 billion compared to US Bank's total deposits of $215 billion. So that would make them the 6th largest.
This acquisition is the latest in Capital One's growth. This Bloomberg article has a good history of the "empire building" of Capital One and its CEO, Richard Fairbank:
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.
The next acquisition may be HSBC's credit card portfolio. According to the Dow Jones via the WSJ, "the bidding for HSBC's cards business is in the early stages. Capital One could fund the expanded card business with the ING deposits."
Future ING Direct & Capital One?
This Washington Post article has some interesting details about how this affects Capital One's internet business:
With the deal, the company's online banking business will more than triple, to $109 billion, with the addition of ING's $80 billion in deposits. Capital One is also spotlighting the desirability of ING’s 7 million customers, many of whom are younger and more wealthy than its own.
This provides a clue about what changes we may see. In my opinion, Capital One will likely keep the ING Direct website and brand. The ING Direct brand is too valuable to lose. Capital One Direct Banking may be what we will lose in this consolidation. If that does occur, that will be a disappointment since their rates have been more competitive than ING Direct rates. For example, Capital One's InterestPlus Online Savings Account currently has a 1.10% APY with a quarterly bonus that increases the effective yield to 1.21% (1.27% for Costco members). As a comparison, ING Direct's Orange Savings Account currently has a 1.00% APY.
I don't expect changes any time soon. With the deal not expected to close until late 2011 or early 2012, we probably won't see changes until mid to late 2012 at the earliest.
http://finance.yahoo.com/news/How-Capital-One-ING-deal-apf-2266673190.html?x=0
I was impressed no wait on the phone and fast closing... I will miss that customer service A
Ally is my only great online savings account now. I can't wait for their eCheck deposit so I can open a checking account with them. I will probably close my Bank of America account next month as they keep rolling new fees and changes all the time.
But I agree regarding cutting one's nose off to spite their face. I have an interest bearing checking account and two credit cards with Capital One. I also do bill pay with them. I can't help but notice that this bank is the only one that actually lowers my rates when my CC payments are on time and more than the minimum. Yes, I do carry a balance. But my other cards' rates remain at a high level, regardless. Chase comes to mind.
I also bank with ING and do the majority of my bill pay with them with two direct deposits going in weekly and once monthly. I like that they charge an 11.5% finance rate instead of a huge fee if needing to use the line of credit. This, to me, trumps interest rates for saving.
Its a shame too because I just recently signed up all my billpays with ING and closed out my dedicated checking account elsewhere.
I have 2 rewards checking accounts but their sign up/billpay pages are more cumbersom and harder to use so I didnt want to use those for a real checking.
I already have 100k sitting there at ING anyway so the smart move was to go ahead & use it. At least until the capital one stench becomes too great to deal with.
Whats the saying ? You only get one chance to make a good first impression ? Capital One had it and blew it.
Nor Chase, Discover, Penfed or Bank of America where I have credit cards.
Funny how I ONLY have a problem with captial one. Couldnt be them.
LOL
during the sale and give your savings a little sizzle.
during the sale and give your savings a little sizzle.
This is an ING direct promo piece.
I had a Capital One card years ago and accidently paid my bill a day too early for the next month's billing cycle. Therefore, I "missed" my payment for that month. They took away the promotional rate and refused to post my payment a day later. I escalated the issue to a manager. They would not budge, even though I have never made a late payment- ever. I paid the card off and swore I would never bank with them again.
This is an awful thing to happen.. I can't say it enough.