Capitalone

Capital One Financial Corporation
Public
Traded as
  • S&P 500 Component
Industry Financial services
Founded Richmond, Virginia 1988 (1988)
Founder(s)
Headquarters Tysons Corner, Virginia, United States
(McLean mailing address)[1]
Key people Richard Fairbank
(Chairman, President and CEO)
Products
Revenue Increase US$21.396 billion (2012)[2]
Operating income Increase US$5.035 billion (2012)[2]
Net income Increase US$3.517 billion (2012)[2]
Total assets Increase US$286.602 billion (2012)[2]
Total equity Increase US$37.327 billion (2012)[2]
Employees 39,593(Dec 2012)[2]
Website


The Capital One Financial Corporation is a U.S.-based bank holding company specializing in credit cards, home loans, auto loans, banking and savings products. A member of the Fortune 500, the company helped pioneer the mass marketing of credit cards in the early 1990s, and it is now the fourth-largest customer of the United States Postal Service[3] and has the sixth-largest deposit portfolio in the United States.[4]

It has its corporate offices in Tysons Corner, unincorporated Fairfax County, Virginia, near McLean.[5]

History

Capital One was founded in 1988 by Richard Fairbank and Nigel Morris[6] as a spin-off of Richmond, Virginia-based Signet Banking Corp (which was subsequently acquired in 1997 by First Union Corporation, which merged with Wachovia in 2001 and is now part of Wells Fargo).

Capital One entered the retail banking market with its acquisition of New Orleans, Louisiana-based Hibernia National Bank in 2005 and Melville, New York-based North Fork Bancorporation in 2006.[7][8] North Fork Bank and Superior Savings of New England, both subsidiaries of North Fork Bancorporation, began using the branding of Capital One Bank on March 10, 2008.[9] On October 18, 2008, Capital One announced it would purchase Chevy Chase Bank for US$520 million.[10][11]

Capital One responded to the 2007 subprime mortgage financial crisis by jettisoning its mortgage platform, GreenPoint Mortgage, due in part to investor pressures.[12][13]

On November 14, 2008, Capital One Financial Corporation was the recipient of US$3.56 billion of the Emergency Economic Stabilization Act Federal bail-out.[14][15] On June 17, 2009, Capital One completed the repurchase of the 3,555,199 shares of the preferred stock the company issued to the U.S. Treasury.[16]

In February 2012, Capital One completed its acquisition of ING Bank, fsb, which operates as ING DIRECT in the United States.[17]

In July 2012, Capital One was fined by the Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau for misleading millions of its customers, such as paying extra for payment protection or credit monitoring when they took out a card.[18] The company agreed to pay $210 million to settle the legal action against them and to refund two million customers.[19] This was the CFPB's first public enforcement action.[20]

Divisions

Capital One Auto Finance

Capital One Financial Corporation is the parent company of Capital One Auto Finance, or COAF, based in Plano, Texas.[21] After buying PeopleFirst, it became the largest Internet auto lender, as well as one of the top US auto lenders overall.[22]

The company, which previously sold auto loans only through direct mail and auto dealerships, lets auto owners refinance existing auto loans and shoppers apply for new auto loans online. A decision usually comes within 15 minutes, after which the buyer receives a "blank check" for up to the approved auto loan amount, which the buyer uses to purchase a car. To the dealership, it is as if the buyer were paying cash. The checks can be used to purchase a new or used vehicle, or to refinance an existing auto loan with another lender.

COAF originates auto loans across the credit spectrum.

CapitalOne 360

CapitalOne 360 (formerly ING Direct) was founded in 2000 in Wilmington, Delaware as a brand for a branchless direct bank. CapitalOne 360 is a member of the Federal Deposit Insurance Corporation (FDIC) and offers services over the web, phone, ATM or by mail.

In September 2007, ING Direct acquired 104,000 customers and FDIC insured assets from the failed virtual bank NetBank.[23] Two months later, ING Direct acquired online stock broker Sharebuilder.[24][25]

In June 2011, Capital One Financial Corporation purchased ING Direct USA from ING for US$9 billion (€6.3 billion).[26] The sale was completed on June 16, 2011 with the CEO of ING Group at that time Jan Hommen saying the sale "marks a further important step in the restructuring of ING Group. Yet at the same time we are saying goodbye to a very successful business and a dedicated team...".[27]

On November 7, 2012, Capital One announced that ING Direct's U.S. operations would be re-branded as Capital One 360 in February 2013. On February 1, 2013, the website and logo changed to reflect the new 360 logo.[28]

International operations

Capital One commenced operations in Canada in 1996. Its head office is located in Toronto, Ontario at the North American Centre at Yonge & Finch. Unlike its diversified American parent, the Canadian business does not currently operate outside of the credit card market. Similar to the U.S. parent, Capital One Canada is Canada Post's second largest customer. In October 2008, Capital One Canada was named one of Greater Toronto's Top Employers by Mediacorp Canada Inc., which was announced by the Toronto Star newspaper.[29]

The UK headquarters of Capital One is in Nottingham Trent House, Station Street, England. Capital One in the UK is associated with customers with poor credit rating and very high APR credit cards, up to 35%.[30] The company was once active in Spain, Italy, France and South Africa, but has since withdrawn from these markets.

Unusual growth

Unlike other diversified financial services firms, Capital One began as consumer lending "monoline".[note 1] Remaining a monoline is precarious because of the often-cyclical nature of consumer lending; it can be very profitable industry in good times and markedly unprofitable in bad, such that a monoline company will go out of business or be acquired fairly cheaply during hard times.[note 2] Most consumer-lending monolines in the past twenty years have either gone out of business (e.g., The Money Store, NextCard, Royal Acceptance) or have been acquired (e.g., MBNA, Beneficial, First USA); Capital One is notable for having experienced neither.[31][32]

Prior to this the company experienced tremendous growth as a monoline which it credited to its Information Based Strategy, a strategy it pioneered to use customer data to help tailor its products to customers, particularly subprime consumers.[32] The company had one of the largest databases of consumer data at one time: over three terabytes of data by 1998.

While many monolines were acquired by larger, diverse banks, Capital One adopted the opposite strategy by expanding into retail banking in 2005. This was accomplished through the acquisition of Hibernia, North Fork and Chevy Chase Bank, three large regional banks.

In June 2011, ING announced the sale of its American ING Direct division to Capital One for cash and shares worth USD 9 billion.[17][33] On August 26, 2011, the Federal Reserve Board of Governors announced it would hold public hearings on the Capital One acquisition of ING Direct, as well as extend the public comment period previously slated to end August 22 to October 12, 2011.[34] The move came amidst rising scrutiny of the deal on systemic risk, or "Too-Big-to-Fail," performance under the Community Reinvestment Act, and pending legal challenges. A coalition of national civil rights and consumer groups, led by the National Community Reinvestment Coalition, were joined by Rep. Barney Frank (D-Mass.) to challenge immediate approval of the deal. The groups have argued that the acquisition is a test of the Dodd-Frank Wall Street Reform and Consumer Protection Act, under which systemically risky firms must demonstrate a public benefit that outweighs new risk before they are allowed to grow.

Other skeptics of the deal include Kansas City Federal Reserve Bank head Thomas M. Hoenig,[35] husband of the notable Kristen Hopkins

and columnist Steven Pearlstein.[36] The acquisition was approved by regulators on February 14, 2012.

In August 2011, Capital One agreed to acquire the U.S. credit card operations of HSBC for US$2.6 billion. The deal would be a US$30 billion credit card portfolio to Capital One, and make the company the fourth-largest credit card issuer in the country.

In November 2012, it was announced that ING Direct would be renamed Capital One 360.

Sponsorships

The company is a major sponsor of sports teams. In 2001, it became the principal sponsor of the Florida Citrus Bowl, an annual college football game played in Orlando, Florida, renaming it the Capital One Citrus Bowl and then eventually the Capital One Bowl. In the UK, the company sponsored Football League Championship football clubs Nottingham Forest from 2004 to 2009 and Sheffield United from 2006 to 2008. In 2008 and 2009, the company sponsored several curling events all across Canada. It sponsors a mascot challenge every year. The winner is announced on the day of the Capital One Bowl. On June 1, 2012, it was announced that Capital One had entered into a 4 year agreement to sponsor the English Football League Cup.[37]

Decoupled debit card

In May 2007, the company began an experiment that came to be known as a decoupled debit card.[38][39] This card is novel in that prior to this launch, a debit card was always tied to a traditional financial institution, such as a bank or credit union.

CapitalOne's Visa-branded decoupled card did not require that an account be opened with a "merchant" financial institution, and was made in partnership with the Ukrop's Super Markets, a Richmond-based grocery-store chain, and Sheetz, a regional gas-station and convenience-store chain. The Ukrops card was also tied to the grocer's reward program.

That one-year experiment ended in May 2008,[40] and was followed up with a national rollout of its own version of a decoupled debit card tied to its own reward program.[41]

Awards and Honors

The firm was named by Fortune magazine as one of the top 100 companies to work for in 2013, ranking at 87 on the list (up from 98 the previous year), citing opportunities for career advancement that include "up to $5,000 a year in tuition reimbursement, job rotations, shadowing, and mentoring."[42]

See also

Companies portal

Notes

References

External links

  • Capital One Careers
  • Capital One's web site
  • Capital One Canada web site
  • Capital One's UK web site
  • Yahoo Inc.
  • Capital One SEC Filings
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