Ardently anticipated credit card acquisition by Capital One has got some cooling-off time due to the U.S. regulators and a consumer watchdog group ruling. According to Bloomberg News story, Capital One`s projected purchase of U.S. credit card division of HSBC Holdings has been deferred. The Office of the Comptroller of the Currency has reopened the period of comment period concerning the unification.
Capital One, a Virginia-based enterprise had come up with a deal to buy London-based HSBC`s credit card holdings in the U.S. It was originally announced in August of 2011. Capital One Financial Corp. said it would purchase the credit-card business for around $2.6 billion.
According to the original terms, Capital One would acquire HSBC credit card customers, Orchard Bank and companies, Household Bank. This $30-billion portfolio includes retail store and private-label credit cards. This would make Capital One the third-biggest discharger of private-label credit cards. Presently it is ranked sixth with General Electric Co. at no. 1.
For London based HSBC, the sale will take them a step further to divest from its businesses which do not fit with its tapering focus on banking following the fiscal crisis. This will end HSBCs venture into subprime and consumer lending in the U.S.
OCC got a letter from the groups, requesting the agency to have public hearings concerning this merger. As per the Reuters story the key concern is that after acquiring the credit cards division of HSBC, Capital One may transform into a single-focused business which can endanger economic stability. The size of Capital One could increase into a bank which is “too big to fail.”
An email statement was issued from Capital One by Tatiana Snead its spokeswoman; saying that they appreciated that OCC was presenting a further chance for parties who are interested in expressing their view.
The original comment period ended on November 7, 2011. Public comment is open till December 19. It is possible to submit comments by fax to 202-874-5665 or via email to OCCPublicCommentsMailbox@occ.treas.gov or.