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ING selling US online bank to Capital One

ING selling US online bank to Capital One
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US bank Capital One is to buy Dutch firm ING’s online banking operations in the United States for the equivalent of 6.3 billion euros in cash and stock.

The sale will help ING, a Dutch banking and insurance conglomerate in the middle of a breakup, repay the remainder of the money it owes to the Dutch government for a 2008 bailout.

It is the latest move in Capital One’s transformation from a credit card company into a major consumer bank.

ING Direct USA is the 20th-largest US bank and taking over its assets would bump Capital One up two places in the bank rankings to make it the country’s seventh-largest lender by assets, according to SNL Financial, a financial services data firm.

ING has been restructuring since receiving a 10 billion euro bailout from the Dutch government in 2008. The European Commission and ING agreed on a restructuring plan in late 2009. The most surprising part of the plan was a mandate that ING sell its US online banking operations.

Last month ING paid three billion euros to the Dutch state, which included a 50 percent premium, and said at the time that it would repay the remaining three billion euros by May 2012. But with the proceeds from selling its US unit, ING could repay the remainder much sooner.

Early repayment is an important step for the company: once it is free of state restrictions, a European ban on acquisitions will be lifted and ING will have more pricing flexibility, allowing it to better compete.