Capital One to buy HSBC credit unit for $2.6B

Capital One Financial Corp. said Wednesday that it will buy the U.S. credit card arm of Britain's HSBC for a premium of about $2.6 billion as a way to expand its domestic credit card business.

"Adding the HSBC card business to our own will enhance our credit card franchise and accelerate our achievement of a leadership position in retail card partnerships," Capital One chairman and chief executive Richard Fairbank said in a statement.

The acquisition includes the HSBC unit's about $30 billion credit card portfolio.

Capital One shares rose 87 cents, or 2.1 percent, to $41.69 in premarket trading.

HSBC said that all of the unit's employees will be offered jobs with Capital One. The acquisition is expected to close in the second quarter of 2012.

HSBC announced in May that it was exploring a possible sale of the business, which includes its MasterCard, Visa, private label and other credit card operations. The deal does not includes HSBC Bank USA's $1.1 billion credit card program.

The sale of the U.S. credit card division comes a little more than a week after HSBC announced that it will sell almost half its retail branches in the United States. That includes the sale of 195 branches in New York and Connecticut to First Niagara Financial Group.

HSBC said the two actions are part of its plan to make HSBC a more internationally focused business, but reassured that the United States is still considered a key market in its strategy.

HSBC and Capital One said that they expect no immediate changes to the credit card programs and operations.

The division's gross assets were valued at $30.4 billion as of June 30, which includes about $29.6 billion in gross customer loan balances.

Capital One, which is based in McLean, Va., expects to fund HSBC credit card loans mostly with cash and proceeds from repositioning its balance sheet for its buyout of ING Direct. Capital One agreed to purchase ING Direct's U.S. online banking service in June for about $9 billion in cash and stock.