Capital One to buy ING for $9 billion  In a deal that illustrates the ongoing consolidation among big financial firms, Capital One announced this week that it plans to purchase ING Direct. 

Capital One said it will buy ING Direct for $9 billion in stock and cash as it looks to expand its customer network. ING Direct was valuable to Capital One because of its national direct deposit franchise and its 7 million customers, who are mostly young and high-income, the company said.

Capital One is the top performer in the KBW Bank Index this year and with its acquisition will become the sixth-largest lender by deposits in the U.S. What's more, the company's decision to take over ING represents the biggest bank takeover since 2008. It will also help the Virginia-based company to diversify its funding base, Bloomberg reports.

ING has a business model that largely promotes business through the Internet and has only seven locations in the U.S.

Jefferies Group analyst Jonathan Hatcher told the news source "the strategy is deposits," affirming that Capital One is courting young affluent customers with the acquisition. "ING Direct had gained great traction in the U.S., and obviously it’s a low-cost way of gathering deposits. For younger people it’s not as important to have a bricks-and-mortar branch."
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