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Capital One to Acquire HSBC
Capital One Bank announced on Wednesday that it has plans to acquire HSBC’s $30 billion domestic credit card business. The McLean, VA-based bank will pay a premium of 8.75% over the value of the loans, which was estimated to be approximately $2.6 billion at the end of June 2011. Capital One expects to realize cost synergies of approximately $350 million and incur restructuring costs of approximately $420 million in connection with the deal.
"The acquisition of HSBC's domestic credit card business is an attractive strategic and financial opportunity in a business we know well," said Richard D. Fairbank, Chairman and Chief Executive Officer of Capital One. "Adding the HSBC card business to our own will enhance our credit card franchise and accelerate our achievement of a leadership position in retail card partnerships. We are very excited to work with our new retail and co-branded partners, as well as the HSBC associates who are joining Capital One. Together, we look forward to providing exceptional value and service to our new customers."
HSBC said the reason for the sale was that the company wants to expand its international business, but stated that the U.S. is still a key market in its strategy. HSBC doesn’t expect any changes to cardholder programs or operations in the near future and said customers should continue to use their cards the way they do today.
Stuart Gulliver, HSBC Group Chief Executive, said in a statement that all HSBC employees will be offered a chance to work for Capital One. “I would like to take this opportunity to thank the management team and employees for their dedication and wish them every success for the future," he added.
The news follows Capital One’s announcement in mid-June of their plan to acquire ING Direct for $9 billion in cash and stock. The ING deal adds 7 million high-earners to Capital One’s customer base and makes it the fifth largest bank in the U.S. (by amount of deposits) - up from the eighth largest.
Despite the expected addition of approximately $30 billion of HSBC credit card loans, Capital One does not expect a significant increase in total assets. Capital One plans to fund HSBC credit card loans primarily with cash and the proceeds from the balance sheet repositioning related to the ING deal.
Sources:
Capital One Bank
HSBC
"The acquisition of HSBC's domestic credit card business is an attractive strategic and financial opportunity in a business we know well," said Richard D. Fairbank, Chairman and Chief Executive Officer of Capital One. "Adding the HSBC card business to our own will enhance our credit card franchise and accelerate our achievement of a leadership position in retail card partnerships. We are very excited to work with our new retail and co-branded partners, as well as the HSBC associates who are joining Capital One. Together, we look forward to providing exceptional value and service to our new customers."
HSBC said the reason for the sale was that the company wants to expand its international business, but stated that the U.S. is still a key market in its strategy. HSBC doesn’t expect any changes to cardholder programs or operations in the near future and said customers should continue to use their cards the way they do today.
Stuart Gulliver, HSBC Group Chief Executive, said in a statement that all HSBC employees will be offered a chance to work for Capital One. “I would like to take this opportunity to thank the management team and employees for their dedication and wish them every success for the future," he added.
The news follows Capital One’s announcement in mid-June of their plan to acquire ING Direct for $9 billion in cash and stock. The ING deal adds 7 million high-earners to Capital One’s customer base and makes it the fifth largest bank in the U.S. (by amount of deposits) - up from the eighth largest.
Despite the expected addition of approximately $30 billion of HSBC credit card loans, Capital One does not expect a significant increase in total assets. Capital One plans to fund HSBC credit card loans primarily with cash and the proceeds from the balance sheet repositioning related to the ING deal.
Sources:
Capital One Bank
HSBC
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