UPDATE: Capital One To Offer $1.25 Billion In Common Stock
15 March 2012 - 9:13AM
Dow Jones News
Capital One Financial Corp. (COF) plans to offer $1.25 billion
of its common stock to help fund its acquisition of HSBC Holdings
PLC's (HBC, 0005.HK, HSBA.LN) U.S. credit-card operations.
Capital One is buying HSBC's U.S. credit-card business, which
includes about $30 billion in loans, for $2.6 billion. The deal
would make Capital One one of the largest issuer of private-label
credit cards.
The company, which transformed itself from a credit-card lender
to a bank just before the financial crisis, has benefited along
with many of its peers in recent months as its credit quality
improves. A stronger portfolio helped drive Capital One's profits
higher earlier in the year, though Capital One's fourth-quarter
profit fell a surprising 42% as it reported higher provisions for
losses on loans.
Capital One completed its acquisition of ING Direct USA from ING
Groep NV (ING, INGA.AE) last month in a deal valued at $9
billion.
The McLean, Va.-based company also said it expects earnings per
share from continuing operations of at least $2.50 in the first
quarter. The estimate includes an expected purchase gain of about
$600 million, or $1.15 per share, related to the ING Direct
acquisition.
In the fourth quarter, Capital One earned 89 cents per share
from continuing operations.
It estimated its Tier 1 common ratio will be "well above 11%" at
the end of the current quarter, though it targets a ratio in the
mid-9% range at the end of the second quarter, when it expects to
complete the HSBC acquisition.
Capital One had a Tier 1 common ratio of 9.7% in the fourth
quarter.
Shares slid 0.8% to $51.92 in after-hours trading. The stock is
up 24% so far this year.
-By Nathalie Tadena, Dow Jones Newswires; 212-416-3287;
nathalie.tadena@dowjones.com; and Andrew R. Johnson, 212-416-3214;
andrew.r.johnson@dowjones.com
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