Capital One to Sell $1.25 Billion in Stock

March 15, 2012 Updated: October 1, 2015
Capital One bank
Pedestrians pass by a Capital One bank branch in Midtown Manhattan on March 16. Capital One Financial Corp. said Thursday it is selling $1.25 billion in new stock, which will help fund its growth from a regional bank to a banking giant with national presence. (Benjamin Chasteen/The Epoch Times)

Capital One Financial Corp., a regional bank and one of the nation’s biggest credit card issuers, said Thursday that it will sell around $1.25 billion in new shares to help fund a recent acquisition.

The McLean, Va.-based Capital One will issue 24.4 million shares at a price of $51.65 per share to help fund its acquisition of HSBC Plc’s U.S. credit card business.

The HSBC deal will add around $30 billion in assets to Capital One, which is one of the only banks currently on a growth binge. Earlier this year, Capital One completed its $9 billion purchase of ING Direct USA, an online bank, formerly owned by the Netherlands’ ING Groep N.V. That acquisition will add around $80 billion in deposits. The two deals will transform Capital One from a regional bank to a banking giant with national presence.

First Quarter Guidance Issued

Capital One also said this week that its fiscal first quarter earnings per share would come in at least $2.50 per common share. That estimate is inclusive of a one-time gain of $1.15 per share due to the ING Direct acquisition.

The bank also expects Tier 1 capital as of the first quarter to be in excess of 11 percent. Tier 1 capital is a widely used measure to assess capital adequacy at banking firms.

Capital One also passed the latest round of Federal Reserve stress tests, demonstrating that it has enough capital to withstand a severe market disruption. While some banks that passed the test planned to hike their dividend payout to shareholders, Capital One did not announce such measures.

Barclays Capital, Citigroup, Morgan Stanley, and Credit Suisse are assisting in the share issuance, the company said.