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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.

Related Posts

  |     |   Comment #1
Capital One's savings account rates may be better than ING but their CD rates are much lower than ING.
  |     |   Comment #2
That's a good point about the CD rates. Also, Capital One's early withdrawal penalty is much worse than ING Direct.
  |     |   Comment #3
Here's an AP article on "How Capital One/ ING deal affects customers."

Are Good  No-Penalty CDs Available?
  |     |   Comment #4
Somewhat related...Tennessee Commerce Bank recently informed that they are lowering their savings rate effective July 1.  They are offering a 30-month CD (available even until this fall) apparently only to currrent savers that is a no-penalty CD and allows a partial or full withdrawal. Does anyone know of any no-penalty CDs currently offered elsewhere?  
  |     |   Comment #5
I closed my ING yesterday

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.
  |     |   Comment #6
What will this mean for Sharebuilder customers?
  |     |   Comment #7
I hate capital one from when I had a credit card with them YEARS ago.
They made a mistake, made ME pay a late fee and wouldnt wave it.
I will NEVER do business with them again. Will close my account when the deal is final.
Shame, I liked ING even though their rates havent been as good in recent years.
  |     |   Comment #8
Count me out as well.  I have been with Ing for many years but will never do business with Capital One again under any circumstances. 
  |     |   Comment #9
So if I currently have money on deposit at ING and at Capitol One, does this merger mean I will have all my funds at a single bank instead of two and affect my FDIC limits?
  |     |   Comment #10
Capital One is a great bank. All of you complaining make me laugh. Yah.....right.....Capital One made all the mistakes and nothing could ever possibly be your fault......Give me a beak. If you were charged a fee......it was your fault. If Capital One made a mistake they would refund. It's so funny......we always get only one side of the story on this board......and it's always the evil bank that was wrong. Uh no......sorry it doesn't work that way. Banks are rarely wrong......it's the customers that are wrong. Stop whinning and complaining!!
  |     |   Comment #11
#10, a bank is only as good as the people who run it. There WILL be human error.

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.
  |     |   Comment #12
Sorry #10, it wasnt my fault and they still wouldnt waive the fee.  So you can wager I wont be a customer of theirs when the change occurs.

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.
  |     |   Comment #13
And its funny how Ive been with ING since March 29, 2001 and have nothing bad to say about them.

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.

  |     |   Comment #14
A few years ago, I had two credit cards with Capital One and decided to close one of them.  I called, gave the card number and had the CSR repeat it back to me TWICE to make sure they closed the right one.  The next day, the one I kept was rejected at Lowe's.  I called Capital One and sure enough they closed the wrong card.  They refused to fix their mistake.  I would NEVER do business with Capital One again.  Mistakes can certainly be made by anyone but when the company refuses to fix their mistake, it is time to dump them. 
  |     |   Comment #16
Get ready for explosive savings this July 1st – July 2nd Fill your holiday weekend with fireworks, barbecues and savings. Check back here
during the sale and give your savings a little sizzle.

  |     |   Comment #17
Get ready for explosive savings this July 1st – July 2nd Fill your holiday weekend with fireworks, barbecues and savings. Check back here
during the sale and give your savings a little sizzle.


This is an ING direct promo piece.
  |     |   Comment #18
Ing always does specials tied to holidays.  They used to be pretty good deals but over time they have become less so.  They are going to have to put out some really special deals to keep a large number of their customers heading for the door once Capital One takes over.  I closed my account two days ago and no matter what deals they offer I won't go back and be a customer of Capital One even under the Ing name.
  |     |   Comment #19
How does international banking work? Could I be a customer with ING and have a Dutch account? It's still online banking. I do not know the restrictions for such things or if it would be worth it. Does anyone have a fact-based answer for this? 

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. 
  |     |   Comment #20
I too had a credit card with Capital One.  I did not like them.  I closed out the credit card and will not do business with them again.  I am sorry to see ING go.
  |     |   Comment #22
Capital One is a terrible company to do business with.  After a 3 year illness all of my creditors were willing to work with me to help me get back on track.  Capital One took me to court and charged me, in addition to what was owed the legal fees when they were the ones who would not work with me on a payment plan.  I did set up a payment plan with them that was more than I could afford in order not to have my wages garnished.  I got a forbarrance on my student loans and borrowed money from my mother in order to make the payments that were $300 more than I could afford each month.  I noticed that my name was still on the docket so I call the circuit clerks office and when the lady I talked to heard it was Capital One she said that even though I have an agreement in writing with them for a payment plan that she would strongly recommend that I be in court because if I am not they will try to get my wages garnished anyways.  How unethical can this company get.  I will have this debt payed off in 2 years and at that time I will be completely debt free as all of my other creditors have worked with me.  I will be ready to buy a house, purchase furniture, etc., but I will never ever do business with Capital One or any bank they are affiliated with.  I will make this a priority the rest of my life and I will share my story with anyone who will listen.  Just a side note, when I went to court Capital One had about 25 more cases there the same day as me and the attorney would make comments when people didn't show such as this makes it easy and stuff like that.  I know that had I not checked I would not have thought I had to show up because we had an agreement.  I was even told by the attorney's collection department that it was settled so I wouldn't have to go.  Thank God I am not trusting of this company and called the circuit clerks office.  Close those accounts people before you end up sick and in financial problems and these blood suckers won't work out payment plans with you that you can actually afford to make and still take your medications and actually eat healthy food.
  |     |   Comment #23
Any thoughts on no. 9's question?

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