NEW YORK (AP) -- The Federal Reserve is expected to make a decision Monday on Capital One Financial Corp.'s planned $9 billion acquisition of online bank ING Direct.
Capital One said in June it would buy the U.S. digital unit of Netherlands-based ING Groep. The purchase has drawn opposition from community banks and consumer advocates, who argue that the deal will create another "too big to fail" bank. In a separate deal, Capital One is also planning to buy HSBC's credit card unit.
The financial regulatory overall passed in 2010 requires the Fed to determine whether a bank merger would pose a systemic risk to the economy. If a deal has the potential to create such a risk, it may be blocked.
Under the terms of the deal, ING Groep will receive $6.2 billion in cash and $2.8 billion in the form of Capital One shares.
Capital One CEO Richard Fairbank said on Wednesday, the day the Fed was originally set to rule on the acquisition, that the company expects to close the deal by the end of March.
McLean, Va.-based Capital One is best known for its credit cards sold through the ubiquitous "What's in your wallet?" advertising campaign. About 65 percent of the bank's revenue in the 2011 fourth quarter came from its credit card business.
The company also has about 1,000 branches, mostly in New York, New Jersey, Texas, Louisiana, Maryland, Virginia and the District of Columbia. About 31 percent of fourth-quarter revenue came from consumer banking, and the rest from commercial banking.
Capital One sees the ING deal as a way to expand its national banking operations without building brick-and-mortar locations across the country.
"Retail banking is inherently a local game," Fairbanks said, speaking at an investor conference. "I think head-to-head, our retail banks compete really quite well with the national players in our local markets.
"The rest of Capital One is a national company," he continued. "We have a national product scale, we have national brand scale, that's kind of who we are, to be able to now become a national bank and without having to pay all the costs associated and the violence associated with doing that through big expensive bank acquisitions. This is a very significant transformational thing for Capital One and it will allow us to now build a multi-product, essentially national bank across all the product lines."
Fairbank also noted that ING Direct has more than 7 million customers "with attractive demographics," and a great deal of loyalty to its services. Capital One sees that customer base as a new market for its own products.
In the past few years, banks have placed an increasing emphasis on what is known as "cross-selling," or signing customers up for multiple products like credit cards, checking and savings accounts, mortgages and other loans.
Consumer groups are concerned that Capital One's reliance on volatile consumer credit cards means that allowing it to expand to become the nation's fifth-largest bank would pose a wider risk.