Update on ING Direct Merger into Capital One

It has been over 7 months since Capital One first announced its acquisition of ING Direct. When it was announced, Capital One said it had planned to close the deal in late 2011 or early in 2012. It might be taking longer than expected due to the extra regulator scrutiny of the acquisition that was sparked by concerns of Capital One growing from the 8th largest U.S. bank to the 5th largest.

An update on its plans for ING Direct and its HSBC credit card business was released last week in Capital One's Q4 earnings release. Here's an excerpt:

The company expects to close the acquisition of ING Direct in the first quarter and the acquisition of the HSBC US Card business in the second quarter, and expects that the acquisitions will have significant impact on reported results, especially in 2012, from the purchase accounting effects, integration expenses and partial year impacts of these acquisitions.

As you can see, Capital One is warning about the integration expenses impacting 2012 results. According to this NYT article, Capital One "badly missing estimates" in its Q4 earnings, and it blamed some of this to "efforts gearing up for the takeovers".

It appears that the planned ING Direct integration and its costs might be impacting Capital One Direct and its deposit rates. When the ING Direct acquisition was first announced in June 2011, Capital One's InterestPlus Online Savings Account had a yield of 1.10%. This has fallen to 0.70% APY. That's a 36% decline in 7 months.

There have been fewer rate cuts at ING Direct. ING Direct's Orange Savings Account yield has fallen, but not as much as Capital One's InterestPlus Savings yield. In the last 7 months, the Orange yield has fallen from 1.00% to 0.80%.

ING Direct does seem to be dragging its feet on some new features. One in particular is remote deposit capture in which you can deposit checks online. It was almost a year ago when I was told that ING Direct was "working on it". Their FAQ still says "it’s in the works."

ING Direct continues to offer new-account and refer-a-friend bonuses. A $50 bonus for its Electric Orange checking account is on its front page. I last reviewed this bonus in my August ING Direct EO review. The bonus and requirements appear to be the same. It will be interesting to see if the new ING Direct after the merger into Capital One completes will continue these bonuses. In previous years it made sense for new customers to wait for Independence Day and Black Friday after Thanksgiving to open an Electric Orange account when the new-account bonus has been over $100. It will be interesting to see if those promotions will continue.