This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Capital One's ING Play a 'Head Scratcher'

NEW YORK ( TheStreet) -- A potential acquisition of ING Direct (ING - Get Report) by Capital One (COF - Get Report) is a "head scratcher," that would make less sense than an acquisition by General Electric(GE - Get Report), according to industry analysts.

Bloomberg reported that both companies had submitted bids for ING Direct that reach $9 billion. GE's bid was all cash, while Capital One's bid apparently included stock, according to the report.

"They have the liquidity and a stable balance sheet," said Morningstar analyst Michael Kon. "It is a bit of a surprise, in that it's a online bank and that is something that Capital One didn't really look to strategically grow. And ING Direct has a large mortgage business, which is an area that Capital One wants to exit."

Capital One closed its residential mortgage business, GreenPoint Mortgage in 2007, which it acquired with its 2006 acquisition of North Fork.

Kon rationalized that Capital One may see potential to build up online, or could be seeking build up deposits. .

"I am a little surprised that Capital One would be interested from a strategic standpoint, especially after investor reaction to the North Fork and Chevy Chase deals," said Sandler O'Neill analyst Michael Taino.

During those two acquisitions, which took place between 2006 and 2008, Capital One investors reacted negatively to both deals, claiming that management overpaid for the banks, said Taino.

"The stock is down, which may be an indicator of how investors may feel about a deal. Capital One got very good assets in the past, and in my opinion the criticism was unjustified," said Kon.

Capital One's stock was trading down three cents on the rumors that it may acquire ING Direct at $50.70.

Sterne Agee analyst Henry Coffey says the acquisition may make sense for Capital One, but he still does not recommend the stock.

"When you look at the success that Discover (DFS - Get Report) or Ally have had with indirect banks and how successful other platforms have been, it may work," said Sterne Agee analyst Henry Coffey. "You would hope they would get the acquisition right this time if they did it."

Calls to Capital One for comment were not immediately returned.

--Written by Maria Woehr in New York.

To contact the writer of this article, click here: Maria Woehr. To follow the writer on Twitter, go to http://twitter.com/newsgirlmw.

To submit a news tip, send an email to: tips@thestreet.com.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
COF $79.62 0.00%
DFS $55.40 0.00%
GE $26.26 0.00%
ING $16.98 0.00%
AAPL $122.99 0.00%

Markets

Chart of I:DJI
DOW 17,751.39 +121.12 0.69%
S&P 500 2,108.57 +15.32 0.73%
NASDAQ 5,111.7330 +22.5270 0.44%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs