Regulator Approves Capital One Purchase Of HSBC Credit Card Portfolio

A U.S. banking regulator said Friday it approved Capital One Financial Corp.'s (COF) $2.6 billion purchase of the U.S. credit-card business of HSBC Holdings PLC (HBC).

The deal was approved by the Office of the Comptroller of the Currency, which regulates national banks. After the deal Capital One, based in McLean, Va., would remain the fourth-largest U.S. credit-card issuer.

The deal includes about $30 billion of credit-card loans, prime and subprime, as well as so-called private-label credit cards that banks issue in the name of others, including retailers. It will make Capital One the third-largest issuer of private-label credit cards; it ranks sixth now, and General Electric Co. is No. 1.

Once the deal closes, Capital One would issue credit cards for General Motors Co., the AFL-CIO, Saks Inc., Neiman Marcus Inc. and Best Buy Co., among others.

The move comes after the Federal Reserve Board voted last month to approve Capital One's plan to buy ING Groep NV's U.S. online-banking business. That deal will make Capital One the nation's fifth-largest bank based on deposit size and bolsters Capital One's transformation from a credit-card lender into a large national bank.

The OCC said it reviewed numerous complaints that Capital One had not done enough to serve the interests of low-income communities. It rejected those arguments, saying that Capital One has met community needs "through community development lending, qualified investments, and community development services."

-By Alan Zibel, Dow Jones Newswires; 202-862-9263; [e-mail]