Fed Approves Capital One, ING Deal

The Federal Reserve unanimously approved Capital One Financial (COF)'s $9.2 billion purchase of ING Groep NV (INGA)'s online banking unit in the United States, sealing the biggest merger since the Dodd-Frank law enacted stricter reviews of such deals.

The Fed's five governors approved the deal while taking into consideration new regulations that require a sincere accounting of the potential impact the company's failure would have on the financial sector.

The deal is expected to close by the end of the first quarter, creating a company with more than $300 billion in assets and giving Capital One 7 million new customers. It make Capital One the fifth-largest U.S. bank, as measured by deposits.

McLean, Va.-based Capital One's deal with the Dutch financial outfit would meet the European Commission's requirement the company's U.S. arm be divested as a condition to receive rescue funds from the Netherlands.

The approval came in spite of consumer groups and small bankers lambasting the deal during hearings held in Washington, San Francisco and Chicago last fall, claiming the new company would create an economic leviathan.

The Fed is requiring Capital One to ramp up internal controls and to monitor risks due to the "the size, complexity, and diversification of the business lines" the deal will create.

"The board's action directed Capital One to take specific steps to ensure that its risk-management systems, including compliance, are commensurate with its new size and complexity," the central bank said in a statement.

News of the merger made investors bullish, as Capital One's shares rose $1.71, or 3.5 percent, to $49.69, while ING rose 19 cents, or 2.2 percent, to $8.81.