Capital One to Buy ING Direct Online Banking for $9 Billion

ING Direct’s online banking unit will soon be purchased by Capital One Financial Corp for $9 billion in cash and stocks, said Cap One on Thursday. With this purchase, the McLean, Va.-based company, best known for its credit cards, will be making its entrance into the world of online banking.

Deal a “Game-Changing Transaction” for Capital One

Capital One is known for offering a large portfolio of credit cards, but while this is the company’s primary business, it also has about 1,000 bank branches throughout New York, New Jersey, Louisiana, Virginia, Texas, Maryland and the District of Columbia.

The new online banking venture is something that will take the company in a new direction. Capital One CEO Richard Fairbank said the deal is a “game-changing transaction” that will move the company from the eighth largest bank in the U.S. to the number five spot.

It is likely to expand the online banking business once acquired, opening branches in select markets with large numbers of ING customers.

ING to Become Largest Single Shareholder in Cap One

Under the terms of the deal, ING Groep will receive $6.2 billion in cash and $2.8 billion in Capital One shares, making ING the largest single shareholder in Cap One after the deal closes. The company will also have the right to be represented by a member of Cap One’s board of directors.

Currently, ING Direct, which was launched in 2000, offers online banking services to 7.7 million customers and is the largest direct bank (a bank without a network of branches) in the country.

The deal will not affect ING Direct’s operations in Canada, Australia, France, the United Kingdom, Austria, Italy, Spain or Germany.