UPDATE: Capital One Names Former Morgan Stanley CFO Crawford as CFO-Designate

--Stephen Crawford to join Capital One as CFO designate

--CFO Perlin to step down in May, will stay as a senior advisor to the CEO until February 2014

--CEO Fairbank: "Our financial house in good order."

(Adds comments from CEO Richard Fairbank and analysts.)

 
   By Matthias Rieker 
 

Capital One Financial Corp. (COF) said Friday its Chief Financial Officer Gary Perlin will retire in May, and former Morgan Stanley (MS) CFO Stephen Crawford will join the bank to succeed him.

Mr. Crawford, who rose to co-president at Morgan Stanley under former Chief Executive Philip Purcell, has advised Capital One for several years on financial and strategic matters. Mr. Crawford, 48, will join Capital One on Monday as CFO designate.

Mr. Perlin plans step down on May 24 after turning 62 years old that month. He will stay until February 2014 as a senior advisor to chairman and chief executive Richard Fairbank, 62.

Sanford C. Bernstein & Co analyst Kevin St. Pierre called the hiring a "positive" and said Capital One "may have also found the heir apparent to Rich Fairbank." A Capital One spokesoman said Mr. Fairbank doesn't have any plans to retire.

Shares of Capital One rose 0.7% Friday afternoon, to $56.72. The stock has risen 21.5% over the last 12 months.

Mr. Fairbank and Mr. Perlin have been a close team, transforming Capital One from a credit card lender into a retail bank just before the financial crisis hit through the purchase of two large regional banks in New Orleans and New York.

Mr. Perlin has long insisted that Capital One would have survived the crisis even without the bank acquisitions, but funding credit card loans and the reluctance of consumers to borrow on their cards during the recession would have challenged Capital One severely.

Two weeks ago, Capital One reported a fourth-quarter profit of $843 million, or $1.41 a share, up from $407 million, or 88 cents a share, a year earlier. Total net revenue climbed 39% to $5.62 billion.

Last year it acquired the U.S. online-banking arm of ING Groep NV (ING) and the U.S. credit-card business of HSBC Holdings PLC (HBC), a move that has made it one of the largest issuers of private-label credit cards that are marketed on behalf of retailers and other partners.

"Gary is leaving our financial house in good order," Mr. Fairbank said in a memorandum to staff. He wrote that Mr. Perlin "has improved our operations across accounting, treasury, and finance" and "brought even more discipline and rigor to how we manage our balance sheet and financial performance."

Throughout the transition to a bank, Mr. Crawford has advised Capital One, and that made him a logical choice for CFO, Capital One said.

Mr. Crawford "knows our company, the industry and our management team well. And he has significant financial services and CFO experience," Mr. Fairbank said in a press release announcing the appointment Friday.

Mr. Crawford founded the investment banking and advisory firm Centerview Partners Holdings LLC after leaving Morgan Stanley in 2005 following a short and turbulent tenure in the Wall Street firm's uppermost ranks.

Mr. Crawford resigned soon after Mr. Purcell was ousted and John Mack took over the leadership of Morgan Stanley. Mr. Crawford received a controversial $32 million pay package when he left.

Morgan Stanley declined to comment on Mr. Crawford's appointment at Capital One Friday.

Mr. Perlin had said he wanted to retire when reaching the age of 62. He was "instrumental as we successfully weathered an unprecedented financial crisis and emerged in an even stronger position to grow our company and create shareholder value," Mr. Fairbank said.

Mr. Perlin joined Capital One in 2003 from the World Bank, where he rose to CFO. Until 1993, he was an executive with mortgage company Fannie Mae. Capital One steered clear of the mortgage business, in part because Mr. Perlin and Mr. Fairbank thought mortgage interest rates didn't reflect the inherent risk in the mortgage business, an assessment that proved correct when the housing market imploded.

Mr. Perlin is "a solid CFO," said KBW analyst Sanjay Sakhrani. "It's definitely a loss." But "a lot of the heavy lifting that needed to be done is done."

Now Capital One needs to demonstrate that its strategy of recent acquisitions will be successful, and returning capital to shareholders is going to be a big part of investors' expectations going forward, Mr. Sakhrani said.

-Write to Matthias Rieker at [e-mail]

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