UPDATE: Capital One To Offer $1.25 Billion In Common Stock

Capital One Financial Corp. (COF) plans to offer $1.25 billion of its common stock to help fund its acquisition of HSBC Holdings PLC's (HBC, 0005.HK, HSBA.LN) U.S. credit-card operations.

Capital One is buying HSBC's U.S. credit-card business, which includes about $30 billion in loans, for $2.6 billion. The deal would make Capital One one of the largest issuer of private-label credit cards.

The company, which transformed itself from a credit-card lender to a bank just before the financial crisis, has benefited along with many of its peers in recent months as its credit quality improves. A stronger portfolio helped drive Capital One's profits higher earlier in the year, though Capital One's fourth-quarter profit fell a surprising 42% as it reported higher provisions for losses on loans.

Capital One completed its acquisition of ING Direct USA from ING Groep NV (ING, INGA.AE) last month in a deal valued at $9 billion.

The McLean, Va.-based company also said it expects earnings per share from continuing operations of at least $2.50 in the first quarter. The estimate includes an expected purchase gain of about $600 million, or $1.15 per share, related to the ING Direct acquisition.

In the fourth quarter, Capital One earned 89 cents per share from continuing operations.

It estimated its Tier 1 common ratio will be "well above 11%" at the end of the current quarter, though it targets a ratio in the mid-9% range at the end of the second quarter, when it expects to complete the HSBC acquisition.

Capital One had a Tier 1 common ratio of 9.7% in the fourth quarter.

Shares slid 0.8% to $51.92 in after-hours trading. The stock is up 24% so far this year.

-By Nathalie Tadena, Dow Jones Newswires; 212-416-3287; [e-mail]; and Andrew R. Johnson, 212-416-3214; [e-mail]