3 Things That Could Move Financial Stocks Today

NEW YORK ( TheStreet) -- Capital One ( COF) announced a public offering of $1.25 billion to fund its purchase of HSBC's ( HBC) credit card business, after the Federal Reserve said it had no objections to its capital raising plans.

Last month, the Fed approved Capital One's acquisition of ING's U.S. online banking business, clearing the way for it to become the fifth largest bank. The approval also signaled that the regulator was comfortable with the size of the bank post-merger.

The bank is expected to leverage the deposits won from the ING Direct acquisition to fund the expansion in its credit card business post the HSBC acquisition.

Investors continue to react to the stress test results, with Citigroup ( C) feeling the heat. The bank's board was caught by surprise by the Fed's rejection of its capital return plans, according to a report by the Wall Street Journal.

Citi failed to meet the minimum requirement of 5% Tier 1 Capital in a hypothetical stress scenario assuming it went ahead with its capital deployment plans. This might be a case of Citigroup being overly ambitious in its dividend or buyback plans or perhaps over promising shareholders.

But some analysts have expressed concerns on Citigroup's loan portfolios that performed poorly under stress. "I was very surprised," Jason Goldberg, a bank analyst at the brokerage Barclays Capital, who had expected Citi to increase its quarterly dividend to 10 cents per share from 1 cent told the Associated Press. "The Fed gets to see much more financial data than any of us and has taken a much harsher view of Citi's loan portfolio."

Bank of America ( BAC) meanwhile passed the test and saw its shares climb higher Wednesday.

Fitch Ratings gave voice to some nervousness about the United Kingdom's Triple-A status on Wednesday, lowering its outlook on the country's long-term debt rating to negative from stable.

The agency affirmed the country's triple A rating but cited its exposure to instability in other parts of Europe as well as a mounting debt load in lowering the outlook. "The revision of the rating Outlook to Negative from Stable reflects the very limited fiscal space to absorb further adverse economic shocks in light of such elevated debt levels and a potentially weaker than currently forecast economic recovery," Fitch said in a press release.
Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

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