Olivia Harris/ReutersThe London headquarters of HSBC.
Capital One Financial agreed early Wednesday to buy the United States credit card business of HSBC Holdings for $2.6 billion in cash and stock, in what will be Capital One’s second major deal with a European firm in as many months.
The purchase will give Capital One more than $30 billion of credit card loans. It follows the firm’s agreement in June to buy the American online banking operations of ING Group of the Netherlands for $9 billion.
Capital One said it expected to realize cost savings of about $350 million and incur restructuring costs of about $420 million.
HSBC said that the sale represented a premium of 8.75 percent to the gross customer loan balances and that it would record a post-tax gain of $2.4 billion. The bank, based in London, also said that it would keep its $1.1 billion HSBC USA credit card program and that it would continue to offer credit cards to American customers.
However, the deal will allow HSBC to continue paring back its consumer businesses in the United States as it refocuses on emerging markets and international corporate lending.
HSBC had already announced that it was considering shedding noncore consumer operations and assets as part of a $3.5 billion cost-trimming effort. Last week, the British bank announced plans to lay off 30,000 employees.
It also said that it was selling 195 bank branches, mostly in upstate New York, to the First Niagara Financial Group for about $1 billion.
While the auction of the HSBC card business had attracted other potential suitors, like Wells Fargo, bankers considered Capital One the most likely buyer. Capital On, a 23-year-old firm, began life as a credit card lender, and it remains one of the biggest purveyors of such services to customers with less-than-ideal borrowing histories.
Capital One’s takeover of the ING banking operations was meant in part to bolster mainline banking operations. But the deal also furnished the firm with more deposits that it could use as a source of funds for lucrative acquisitions.
Analysts at Barclays Capital wrote in a research note published after the ING deal that if the firm were to buy the HSBC portfolio, it could raise its earnings per share by 10 percent or more.
Capital One has already benefited from an improving environment for credit card lenders, including fewer charge-offs and lower financing costs. Its card unit more than doubled its profit last year, to $2.3 billion.
HSBC was advised by JPMorgan Chase.
Morgan Stanley, Centerview Partners and the Kessler Group were advising Capital One. Wachtell, Lipton, Rosen and Katz, and Morrison Foerster acted as legal advisers.
Article source: http://feeds.nytimes.com/click.phdo?i=bfbc8aea3b11e98ee793a62c79a0d956