Capital One’s been on quite the buying spree lately. Earlier this year it acquired online bank ING Direct, and now it’s just tossed the U.S. credit card portfolio of HSBC Holdings into its shopping cart, as well. HSBC has been shopping around its American credit card business for a while without finding any takers; at one point, it even considered just shutting it down. But Capital One stepped in and took it off HSBC’s hands for $2.6 billion. “They got it for a really good deal,” says Dennis Moroney, research director at market research company TowerGroup.
The sale is welcome news for London-based HSBC, which was trying to get out of the U.S. in order to focus on emerging markets, and Moroney says Capital One will be happy to get its hands on HSBC’s line-up of co-branded retail credit cards, but will customers who have credit cards issued by HSBC be as pleased with the outcome? ING Direct customers took to the blogosphere to vent their displeasure with Capital One’s acquisition, so Moroney says any changes HSBC cardholder experience won’t be quick or drastic. “Capital One is pretty media savvy,” he says. “They’re going to tread carefully” to avoid alienating customers to such a degree that they cancel their accounts.
Customers with high credit scores will probably be pleased because there’s a good chance they’ll be transferred over to Capital One cards that may offer better terms and perks, Moroney says. What Capital One will most likely be concerned about is the degree of overlap between its existing customer base and HSBC’s. As a result, the company may cut the credit limits of customers with blemished credit to account for the added risk that comes with being exposed to the same lower-scoring customers twice.
The other change former HSBC customers are likely to notice is a lot more marketing. Capital One has been expanding its branch banking business for a number of years now, and it’s added ING Direct to its other credit card and loan offerings. This adds up to a lot of additional products and services the company can now try to sell former HSBC customers. “There are a lot of cross-selling opportunities,” Moroney points out, which could translate to more sales pitches for cardholders.