Fed Greenlights Capital One/ING Deal (Update 1)

Updated with comment on deal timing, from Capital One.

NEW YORK (TheStreet) - The Federal Reserve late Tuesday finally approved Capital One's (COF) deal to purchase ING Direct (USA) from ING Groep (ING).

Capital One's shares were up over 2% in aftermarket trading, rising to $48.95.

After seven months and three public hearings to address concerns over the effect of the merger on consumers and the creation the ninth-largest U.S. bank holding company (by total assets), with combined total assets of roughly $298 billion, the Board of Governors of the Federal Reserve on gave the okay to Capital One's purchase of ING Direct for $6.2 billion in cash and 55.9 million Capital One shares, valued at $2.8 billion.

A Capital One spokesperson said the deal would "close within the next few days as soon as the details associated with the transaction are finalized," adding that "with the Fed's approval, Capital One has the opportunity to build upon the strong foundation of ING Direct for the benefit of our customers, associates, shareholders and local communities."

The Fed said that, in evaluating the deal, it had determined that "Capital One's regulatory capital ratios are well above the minimums required of well-capitalized bank holding companies and would remain so on consummation of the proposal," and that the combined companies subsidiaries would also be considered well-capitalized.

The Fed also said that "this transaction would not materially increase the debt service requirements of the combined company," and that "asset quality and earnings prospects also are consistent with approval."

The regulator added that in approving the ING deal, it had also taken account Capital One's subsequent agreement to purchase HSBC's (HBC) U.S. credit card portfolio, including Capital One's plan to issue common shares to partially fund that $2.6 billion purchase.

The Federal Reserve also said "Capital One and its subsidiary depository institutions are considered to be well managed," with a "demonstrated record of successfully integrating large organizations into its operations and risk-management systems following acquisitions, including its integrations of Hibernia Corporation in 2005, North Fork Bancorporation in 2006, and Chevy Chase Bank in 2009."