Chillin' out till it needs to be funded
The ING bid for $9 bln is $2.8 bln in stock and the rest in cash. According to the WSJ headline, that also gives ING a 10% stake in Cap One and the deal makes it no. 6 in Deposits ahead of US Bancorp. Of course Bank of America is no. 1.
The HSBC portfolio would thus now be funded by the expanded deposits keeping its sails up in the shadows as Economy takes its time in recovery. ING’s 7 million customers bring over $80 billion in deposits and has accepted the sub prime portfolio of ING as part of the deal.
Unfortunately, we thought that is one mess they stayed away from in that bid, but the mortgages are unlikely more than $10 bln leaving it considerable room to grow its $5bln or possibly $35 bln card portfolio. Since double digit defaults last year ,Cap One has managed to bring down defaults to 4.84% Without the HSBC portfolio however , Cap One has just purchased an equally bad mortgage portfolio to match a just recovering Card portfolio
Thus the deposits also leave enough room for growth in outstanding card balances over the next two years and maybe even one more acquisition as BAC looks ripe for a divestment from that business leving pioneers in MBNA headed to Cap One, nice news for the Card company..