Capital One

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Capital One Financial Corporation
TypePublic
Traded as
IndustryFinancial services
FoundedRichmond, Virginia 1988 (1988)
Founder(s)
HeadquartersTysons Corner, Virginia, United States
(McLean mailing address)[1]
Key peopleRichard Fairbank
(Chairman, President and CEO)
Products
RevenueIncrease US$21.396 billion (2012)[2]
Operating incomeIncrease US$5.035 billion (2012)[2]
Net incomeIncrease US$3.517 billion (2012)[2]
Total assetsIncrease US$286.602 billion (2012)[2]
Total equityIncrease US$37.327 billion (2012)[2]
Employees39,593(Dec 2012)[2]
Websitecapitalone.com
 
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Capital One Financial Corporation
TypePublic
Traded as
IndustryFinancial services
FoundedRichmond, Virginia 1988 (1988)
Founder(s)
HeadquartersTysons Corner, Virginia, United States
(McLean mailing address)[1]
Key peopleRichard Fairbank
(Chairman, President and CEO)
Products
RevenueIncrease US$21.396 billion (2012)[2]
Operating incomeIncrease US$5.035 billion (2012)[2]
Net incomeIncrease US$3.517 billion (2012)[2]
Total assetsIncrease US$286.602 billion (2012)[2]
Total equityIncrease US$37.327 billion (2012)[2]
Employees39,593(Dec 2012)[2]
Websitecapitalone.com
Capital One Bank in Wake Village, Texas

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.[clarification needed][4]

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

History[edit]

Capital One retail footprint

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[edit]

Capital One Auto Finance[edit]

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[edit]

Activities announcing the opening of the CapitalOne 360 Café in Boston.

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[edit]

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.[citation needed] 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.[citation needed]

Unusual growth[edit]

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.[citation needed]

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

Sponsorships[edit]

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[edit]

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[edit]

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[edit]

Notes[edit]

  1. ^ A company whose sole business is consumer lending.
  2. ^ Such companies are extremely vulnerable to consumer borrowing behavior, which decreases (or ceases) during such hard times.

References[edit]

  1. ^ "Capital One Financial Corp. (COF)". Yahoo Finance. Yahoo, Inc. September 21, 2011. Retrieved September 21, 2011. "Capital One Financial Corporation operates as the bank holding company for the Capital One Bank (USA), National Association and Capital One, National Association, which provide various financial products and services in the United States, Canada, and the United Kingdom. The company offers various non-interest bearing and interest-bearing deposits, including demand deposits, money market deposits, negotiable order of withdrawal accounts, savings accounts, certificates of deposit, foreign time deposits, and other consumer time deposits. Its loan portfolio consists of credit card loans; consumer loans, such as automobile, home, and retail banking loans; and commercial loans, including commercial and multifamily real estate, middle market, specialty lending, and small-ticket commercial real estate loans. In addition, the company offers credit and debit card products, and mortgage banking and treasury management services. It primarily serves consumers, small businesses, and commercial clients through branches, the Internet, and other distribution channels. The company was founded in 1993 and is headquartered in McLean, Virginia." 
  2. ^ a b c d e f "Capital One, Form 10-K, Annual Report, Filing Date Feb 28, 2013". secdatabase.com. Retrieved Mar 19, 2013. 
  3. ^ "PRC Says OK to Capital One NSA Extension". DMNews.com. Retrieved November 27, 2006. 
  4. ^ "Capital One To Acquire Chevy Chase Bank". [dead link]
  5. ^ "Tysons Corner CDP, Virginia". United States Census Bureau. Retrieved May 7, 2009.
  6. ^ "Our History". Corporate Information. Capital One. Retrieved September 21, 2011. "Richard D. Fairlank is founder, Chairman and Chief Executive Officer of Capital One Financial Corporation. Capital One, headquartered in McLean, New Hampshire, offers a broad spectrum of financial products and services to consumers, small businesses and commercial clients. Mr. Fairbank founded Capital One in 1988 based on his belief that the power of information, technology, testing and great people could be combined to bring highly customized financial products directly to consumers." 
  7. ^ "Capital One, Form 8-K, Current Report, Filing Date Mar 7, 2005". secdatabase.com. Retrieved Mar 19, 2013. 
  8. ^ "Capital One, Form 8-K, Current Report, Filing Date Mar 13, 2006". secdatabase.com. Retrieved Mar 19, 2013. 
  9. ^ "Welcome to Capital One Bank". Capital One. Retrieved September 21, 2011. "The name of your bank has changed, but the same great service is still here." 
  10. ^ "Capital One, Form 8-K, Current Report, Filing Date Dec 9, 2008". secdatabase.com. Retrieved Mar 19, 2013. 
  11. ^ Goldfarb, Zachary A.; Appelbaum, Binyamin (December 4, 2008). "Capital One To Buy Local Banking Icon Chevy Chase". The Washington Post. 
  12. ^ "Capital One, Form 8-K, Current Report, Filing Date Aug 20, 2007". secdatabase.com. Retrieved Mar 19, 2013. 
  13. ^ DiStefano, Joseph M. (August 20, 2007). "Capital One Closes GreenPoint Mortgage, Idling 1,900". Bloomberg. 
  14. ^ "Capital One, Form 8-K, Current Report, Filing Date Nov 18, 2008". secdatabase.com. Retrieved Mar 19, 2013. 
  15. ^ "CAPITAL PURCHASE PROGRAM Transaction Report". Tarp Transactions. United States Treasury. November 17, 2008. Retrieved September 21, 2011. "11/14/2008 Capital One Financial Corporation / McLean VA / Purchase Preferred Stock w/Warrants / $3,555,199,000 / Par" 
  16. ^ "Capital One, Form 8-K, Current Report, Filing Date Jun 17, 2009". secdatabase.com. Retrieved Mar 19, 2013. 
  17. ^ a b "Capital One, Form 8-K, Current Report, Filing Date Feb 17, 2012". secdatabase.com. Retrieved Mar 19, 2013. 
  18. ^ http://www.bbc.co.uk/news/business-18893998
  19. ^ "Capital One, Form 8-K, Current Report, Filing Date Jul 18, 2012". secdatabase.com. Retrieved Mar 19, 2013. 
  20. ^ "Capital One to pay $210 million in fines, consumer refunds". CNN Money. Retrieved Sep 06, 2013. 
  21. ^ "Capital One, Form 8-K, Current Report, Filing Date Jan 23, 2008". secdatabase.com. Retrieved Mar 19, 2013. 
  22. ^ "Capital One, Form 10-Q, Quarterly Report, Filing Date Aug 13, 2002". secdatabase.com. Retrieved Mar 19, 2013. 
  23. ^ INdirect.com
  24. ^ "ING, Form 6-K, Filing Date Nov 6, 2007". secdatabase.com. Retrieved Mar 19, 2013. 
  25. ^ "ING DIRECT Acquires ShareBuilder" (Press release). ING DIRECT USA. November 19, 2007. Retrieved December 8, 2010. 
  26. ^ "Capital One, Form 8-K, Current Report, Filing Date Jun 16, 2011". secdatabase.com. Retrieved Mar 19, 2013. 
  27. ^ "ING completes sale of ING Direct USA". Reuters. February 17, 2012. 
  28. ^ Campbell, Dakin (November 7, 2012). "Capital One Rebrands ING Direct as Orange Ball Gets ‘360’ Motif". Bloomberg. Retrieved November 7, 2012. 
  29. ^ "Reasons for Selection, 2009 Greater Toronto's Top Employers Competition". 
  30. ^ "The top credit cards for poor credit". The Mirror. 16 April 2012. Retrieved 16 April 2013. 
  31. ^ Virginia Business Online: Q&A with Richard Fairbank[dead link]
  32. ^ a b Romeo, Jim (October, 2003). "Answering the Call: Capital One Taps Technology To Improve Recruiting and Retention of Call Center Employees – Special Report – Capital One Financial Corp". HR Magazine (via FindArticles). "Approximately 75 percent of the company's nonexempt employees are phone associates who work in call centers: Capital One hires about 3,000 call-center employees each year. To keep pace with its growth in the late 1990s. Capital One needed to find tools to refine its hiring practices. Meeting its requirement to increase its customer service staff by as much as 40 percent would have been difficult if the company could not find new ways to recruit and retain quality call center associates, reduce turnover and costs, and increase sales. Prior to its growth spurt, Capital One used labor-intensive paper and pencil assessment methods. But executives needed a quick, accurate product that would tie into the company's information-based strategy (IBS) and could accommodate thousands of job seekers. Now, with proprietary database software, the firm recruits, selects and analyzes employee traits that are most predictive of success. The call-center recruitment and assessment process, which was rolled out in 2001 after about three years of planning and implementation, is part of the company's IBS. Capital One's IBS employs technology to gather and use data for everything from profiling customers to managing accounts, evaluating managerial and employee performance, and recruiting and hiring the right people." 
  33. ^ Press release (June 16, 2011). "ING To Sell ING Direct USA to Capital One". ING Groep N.V. Retrieved June 18, 2011. 
  34. ^ "Press Release August 26, 2011". Federal Reserve System. 
  35. ^ Felsenthal, Mark (August 25, 2011). "Fed's Hoenig Says Doesn't See Recession Looming". Reuters. Retrieved August 28, 2011. "The U.S. economy will continue to grow at a modest pace as consumers and businesses pare back excessive amounts of debt, a top Federal Reserve official said. "I don't see a double-dip recession," Thomas Hoenig, president of the Kansas City Federal Reserve Bank, said in an interview with Reuters Insider television. The world's largest economy should expand by between 2 percent and 2.5 percent over the remainder of this year, said Hoenig, whose institution is hosting an annual conference in this mountain valley that draws central bankers and leading economists from around the world. Hoenig played down the significance of two recent gloomy regional reports on manufacturing. Surveys by the Philadelphia and Richmond Fed banks showing weak factory activity in the U.S. Mid-Atlantic and Central Atlantic regions were taken during a period of stock market turmoil and likely reflected the uncertainty of that period, he said." 
  36. ^ Pearlstein, Steven (August 28, 2011). "Columnist". The Washington Post. Retrieved August 28, 2011. 
  37. ^ Parsons, Russell (1 June 2012). "Capital One is new League Cup sponsor". Marketing Week. Retrieved 7 June 2012. 
  38. ^ [dead link] "CapOne Turns Acquisition on Its Head". Javelin Strategy & Research.
  39. ^ [unreliable source?] Henderson, Calin (June 4, 2007). "CapitalOne Becomes a Bank with Checking Accounts". The Bank Watch (blog). Retrieved December 18, 2012.
  40. ^ [unreliable source?] Staff (May 8, 2008). "CapOne Says Its Decoupled Debit Card Pilots Ended on Schedule". Digital Transactions. Retrieved September 22, 2011.
  41. ^ [unreliable source?] Partee, Morriss (July 2, 2008). "Decoupled Debit Card Lives Again!". EverythingCU.com (via Our Blog – a blog of The Members Group). Retrieved September 22, 2011.
  42. ^ http://money.cnn.com/magazines/fortune/best-companies/2013/snapshots/87.html?iid=bc_lp_arrow1

External links[edit]