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Federal Reserve Approves Capital One’s Acquisition of ING Direct

After several delays, the Federal Reserve Board has approved Capital One’s request to purchase ING Direct and ShareBuilder [1]. This deal has been in the works for a while. When ING Direct’s parent company was bailed out, the Dutch government gave the condition that it must divest its business in the United States. Several buyers courted ING Direct, and rumors circulated until the announcement that Capital One was the winning bidder in the summer of 2011.

Update: As of February 2013, ING Direct is known as Capital One 360. Here is a review of the Capital One 360 savings and checking account. [2]

Capital One is considered a financial holding company, and this wouldn’t be the first time the company has grown through acquisition. Capital One has purchased Chevy Chase Bank and North Fork Bank recently.

ING DirectThe Federal Reserve gave the public a significant amount of time to comment on the proposed acquisition. In its forty-page decision, the Fed noted that a “large number of commenters supported the proposal,” while a “significant number of commenters opposed the proposal.” Many on the opposition cited Capital One’s parallel plans to purchase sub-prime credit card assets from HSBC, as well as Capital One’s record in lending to minorities and small businesses.

Regardless of the concerns, the Federal Reserve has given the green light to Capital One to move forward. I’ve been a long-time customer of ING Direct and ShareBuilder, and I’m taking a wait-and-see approach. I’m not ready to switch banks [3] yet, but over the last few years, ING Direct’s record in offering a high-yield savings account [4] has been overshadowed by other banks offering higher interest. I don’t waste my time chasing interest rates [5], so despite its sub-par interest rates, I’ve kept most of my business and personal cash at ING Direct, including my emergency fund [6].

Judging from comments by readers and others in the financial community, Capital One and ING Direct have vastly different reputations. Capital One’s is based mainly on customer services within its credit card businesses, while ING Direct’s is based mainly on those of us who discovered the online bank when it was leading its competitors with high interest rates for its popular Orange Savings Account.

It’s unclear what will happen to ING Direct and ShareBuilder in the future. Capital One has pledged to bring more features to ING Direct account holders, like full-service checking and ATM deposits. These features may be appreciated by customers, but if they come at a cost of lowered interest rates and insufficient customer service, it’s unclear whether consumers will be pleased in the end. Capital One would also bring its suite of other banking products to ING Direct customers, like loans.

Are you a customer of ING Direct or Capital One Bank? What are your expectations for post-acquisition service?

Federal Reserve [7] [pdf]

18 Comments (Open | Close)

18 Comments To "Federal Reserve Approves Capital One’s Acquisition of ING Direct"

#1 Comment By Anonymous On February 15, 2012 @ 9:39 am

I have also been a long time customer of ING Direct and more recently of ShareBuilder. I hope both of them keep the same services because I absolutely love sub-savings accounts. It really helps me with my savings goals. Also, I like the bonuses coming from ShareBuilder. I’m also in a wait and see approach right now.

#2 Comment By Ceecee On February 15, 2012 @ 9:47 am

Yes, I am also in the “wait and see” camp. I loved ING in the beginning when their orange account rate was stellar. Lately, it is merely okay.

#3 Comment By Anonymous On February 15, 2012 @ 10:03 am

I think it would be more than worth it to stick with them at least for a while, to see what kinds of changes are made. It’s always possible that things got improve! At the same time, getting that switching banks checklist together now is probably a good idea too.

#4 Comment By Anonymous On February 15, 2012 @ 10:10 am

I love ING except for the fact that they don’t even come close to matching their competitors interest rates anymore. But like Flexo said – rate chasing is silly these days (and really .95% vs .8%…isn’t really much of a chase, especially with my meager cash holdings!).

Assuming ING stays much like it is as far as customer service and services offered – but adds being able to go into a branch for deposits and withdrawals. That’s a HUGE win in my book – it’s the only thing that really keeps me from shifting totally to ING. If all my cash was in ING and I suddenly, immediately needed $5,000 – I would have no good way of getting it, my daily atm limit is $2000 and bank transfers take at least a business day (and you’ve got to have an account somewhere else to receive it, and if it’s not already linked add at least 2 more days).

#5 Comment By shellye On February 15, 2012 @ 10:28 am

We are ING customers, and have moved my husband’s business account from another bank to ING. I don’t like Capital One at all, but as juggler said, now that it appears ING customers will soon be able to go into CO branches to withdraw cash and make deposits, that might be a plus for those of us who have business accounts. I’m still leery, though.

#6 Comment By Anonymous On February 15, 2012 @ 11:03 am

how big is to big to fail?

#7 Comment By Anonymous On February 15, 2012 @ 3:35 pm

Doesn’t exist. Even the Titanic and Goliath went down.

#8 Comment By Anonymous On February 15, 2012 @ 12:46 pm

I’ve been a customer of ING Direct since 2004 and have no complaints. Count me in the “Wait and see” group though… it’s hard to image how Capital One could improve on ING’s service or offerings. They are more likely to keep the rate lower than competitors and offer the save sort of lackluster service and pushy up-sell techniques that Capital One current has for their products.

#9 Comment By Anonymous On February 15, 2012 @ 2:24 pm

I hope they don’t change a thing. The best part about ING Direct is that the site is simple and isn’t cluttered with all kinds of features I don’t want, unlike every other bank website I use. I’ve tried other online banks and I just don’t like them as much. I hope Capital One won’t force me to switch.

#10 Comment By wylerassociate On February 15, 2012 @ 6:25 pm

I am also a customer of ING direct & share builder so I have concerns about Capital one taking over ING.

#11 Comment By eric On February 15, 2012 @ 11:09 pm

I feel like this can only be bad news, but I’ll wait and see also.

#12 Comment By Anonymous On February 16, 2012 @ 9:01 am

As you likely know the Canadian banking industry is quite strong and did not falter in 2008 (and beyond).

My curiosity is piqued by this acquisition as I have no idea what the impact on the Canadian ING offering will be …

#13 Comment By Luke Landes On February 16, 2012 @ 9:38 am

That’s a good question. As far as I know, this acquisition affects only ING Direct USA. ING Direct Canada will still be owned by ING Group based in Amsterdam.

#14 Comment By Anonymous On February 16, 2012 @ 9:55 am

Interesting how they are splitting up the holding.
Mrs. SPF is 1/2 Dutch so I bet she will be happy to see the continued Dutch Orange in our banking community!

#15 Comment By Anonymous On February 19, 2012 @ 4:42 am

As soon as they announced this deal, things went south.

They’ve been “crossing their t’s and dotting their i’s” regarding scanned check deposits for about 18 months now. Pathetic and expect more of the same. Even I get the paper check every now and then.

#16 Comment By qixx On February 21, 2012 @ 7:35 am

I hope the approval is what the holdup was on some of the “new” yet to be released ING features (like remote deposit). I am not a fan of Capital One so we’ll see how much takeover there is and how much ING will remain separate. If my accounts become CO accounts i’m moving on.

#17 Comment By Anonymous On February 28, 2012 @ 8:32 am

Just logged into my Cap1 account and they *finally* show pending transactions…see Cap1 isn’t all evil:) (this is my biggest pet peeve on credit cards – I hate ones that don’t show pending transactions – I mean they know what they are, they are included in my available credit…)

#18 Comment By Anonymous On December 13, 2012 @ 10:00 am

I closed my ING Direct account for two reasons. One, and I consider this a primary. I had a problem with Capital One which they never apolgized for. A simple apology is what I am looking for way back when and, I hold grudges a long, long time, therefore I swore up and down that I would never be a client of Capital One. Aplogies however, null and voids all grudges that go though this poor man’s soul. Secondly, and obviously the least important. 99% of the time, I kept less than a dollar in that account. Bills were just simply too much to keep in savings. I am now, however, looking for a high yield savings acount that is not with my current checking account holder (my way of forcing myself some self control is if it isn’t easy to transfer money) but, the highest yield I can find that doesn’t require a minimum balance of over $1,000 is… my DDA Accoung holder so… next best thing is to completely sever the relationship the relationship between the two accounts.