CAPITAL One Financial Corp said yesterday it will buy the United States credit card arm of Britain's HSBC for a premium of about US$2.6 billion as a way to expand its domestic credit card business.

"Adding the HSBC card business to our own will enhance our credit card franchise and accelerate our achievement of a leadership position in retail card partnerships," Capital One Chairman and CEO Richard Fairbank said in a statement.

The acquisition includes the HSBC unit's approximately US$30 billion credit card portfolio.

HSBC announced in May that it was exploring a possible sale of the business, which includes its MasterCard, Visa, private label and other credit card operations. The deal does not include HSBC Bank USA's US$1.1 billion credit card program.

The sale of the US credit card division comes a little more than a week after HSBC announced that it will sell almost half its retail branches in the US. That includes the sale of 195 branches in New York and Connecticut to First Niagara Financial Group.

HSBC said the two actions are part of its plan to make the bank a more internationally focused business, but reassured that the US is still considered a key market in its strategy.

HSBC and Capital One said that they expect no immediate changes to the credit card programs and operations. HSBC customers will see no near-term service changes and should be able to use their credit cards like normal.

The division's gross assets were valued at US$30.4 billion as of June 30, which includes approximately US$29.6 billion in gross customer loan balances.

Capital One, which is based in McLean, Virginia, expects to fund HSBC credit card loans mostly with cash and proceeds from repositioning its balance sheet for its buyout of ING Direct.

Source:shanghaidaily