Capital One 2011 Annual Report Download - page 4

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The acquisitions we announced in 2011 are transformational
We completed the acquisition of ING Direct on February 17, 2012, and we expect to close the purchase
of HSBC’s U.S. credit card business in the second quarter. We expect these new acquisitions will deliver
significant financial benefits. We paid essentially no premium for ING Direct and a very low premium, relative
to historical precedents, for HSBC’s U.S. credit card business. As we’ve gotten closer to both companies, we
continue to like what we see. The underlying operations of both acquisitions are performing as we expected
when we announced the deals, and we’re impressed with the talent and commitment of the people.
Since the deals were announced, interest rates have fallen, and most observers now expect an extended
period of low interest rates. We can mitigate much of the potential impact of a “lower for longer” rate
environment by substituting HSBC card loans for the lower-yielding and more rate-sensitive ING Direct assets.
And compared to branch-based deposit businesses, ING Direct’s digital banking model has greater
flexibility to navigate a prolonged period of low interest rates.
We expect that purchase accounting, integration expenses, and partial-year impacts on nearly all P&L line
items will have a significant effect on our 2012 results. We remain on track to deliver the longer-term
financial benefits of the acquisitions. We expect that the combination of Capital One, ING Direct, and the
HSBC U.S. credit card business will deliver compelling financial results and EPS accretion in 2013.
The acquisitions are strategically as well as financially compelling. With more than 7 million customers and
$83 billion in low-cost, stable deposits, ING Direct is, by far, the leading direct bank in the United States. ING
Direct will help us achieve national reach and brand scale in consumer banking without the disruptions
and preemptive costs of a series of traditional bank acquisitions.
ING Direct’s large base of loyal “early digital adopter” customers positions us at the forefront of the digital
revolution in banking. ING Direct brings us direct savings and banking products and legendary customer
service that can expand the power of our brand across all our products. Their customers are passionate
advocates for the company and the customer experience it delivers. ING Direct’s simple, customer-friendly
products and exceptionally high level of customer satisfaction will be a catalyst for improving our products
and customer experience across Capital One.
ING Direct also brings us ShareBuilder, a scalable direct brokerage platform. ShareBuilder offers mainstream
brokerage, investment, and retirement products that extend the winning ING Direct customer experience
beyond savings and direct banking.
HSBC’s U.S. credit card business will be an excellent complement to ING Direct. Where ING Direct
significantly expands our deposits, we expect the HSBC acquisition to add over 27 million active customer