Capital One

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Capital One Financial Corporation
Image:Logo capitalone.gif
Type	Public (NYSE: COF)
Founded	1988
Headquarters	McLean, Virginia, USA
Key people	Richard Fairbank, CEO Gary Perlin, CFO Jory Berson, President of U.S. Card David Lawson, CEO of Capital One Auto Finance Larry Klane, Exec. VP of Global Financial Services
Industry	Financial Services
Products	Credit Cards, Loans, Savings
Revenue	$10.69 Billion
Employees	14,482
Slogan	What's in your wallet?
Website	www.capitalone.com

Capital One Financial Corp. (NYSE: COF) is a McLean, Virginia-based bank holding company specializing in credit cards, home loans, auto loans, banking, and savings products. Founded in 1988 by Richard Fairbank and Nigel Morris, the firm was a pioneer of the mass marketing of credit cards in the early 1990s and is now the fourth largest customer of the United States Postal Service.^[1]

In 2002, Capital One won the Wharton Infosys Business Transformation Award for its innovative strategy specifically related to their credit card products. In 2005, Capital One entered the retail banking market with its acquisition of New Orleans, Louisiana-based Hibernia National Bank.

On March 12, 2006, Capital One announced an agreement to acquire Melville, New York-based North Fork Bank for $14.6 billion U.S. dollars. The merger was completed on December 1, 2006. Upon the completion of the merger, the bank is to be renamed as "Capital One Bank".^[2]

1 Unusual growth
2 Marketing
3 International operations
4 Diversity
5 Controversy
6 Business areas
7 Management and corporate governance
8 See also
9 References
10 External links

[edit] Unusual growth

In its growth, Capital One has bucked a few conventional wisdoms within the financial services industry, such as avoiding the precariousness of companies that only do consumer lending -- also known as consumer lending "monolines." This risk arises from the often cyclical nature of consumer lending; it can be very profitable industry in good times and markedly unprofitable in bad, such that a monoline company -- which lacks other sources of revenue -- will go out of business or be acquired fairly cheaply during hard times.

This is one reason that most consumer lending monolines in the past 20 years have either gone out of business (e.g., The Money Store, NextCard, Royal Acceptance) or have been acquired (e.g., MBNA, Beneficial, First USA); Capital One is notable for having experienced neither.

This precarious nature of remaining a monoline prompted Capital One's entry into retail banking in 2005, which has been similarly uncommon. Whereas many banks often expand into consumer lending, Capital One is the first and only consumer lending monoline to go the other direction and expand into retail banking with major acquisitions (the purchases of Hibernia and North Fork).

However, Capital One's stock performance in the latter half of this decade has largely been flat, prompting modest speculation among Wall Street analysts that the company may be a ripe acquisition target or merger partner.

[edit] Marketing

Capital One is a major sponsor of sports teams. In 2001 Capital One became the principal sponsor of the Florida Citrus Bowl, an annual college football game played in Orlando, Florida, renaming it the Capital One Bowl. In the UK, the company currently sponsors football, Coca Cola Championship club Sheffield United and Coca Cola League 1 club Nottingham Forest.

Image:CapitalOne exterior.jpg

Capital One Bank in Wake Village, Texas

[edit] International operations

Capital One commenced operations in Canada in 1996. Its head office is located in Toronto, Ontario. Unlike its diversified American parent, the Canadian business currently operates solely in the credit card market.

The UK headquarters of Capital One is in Nottingham, England.

Capital One also has a presence in Spain, with the local office located in Madrid.

The company was once active in France and South Africa, but has since withdrawn from these markets.

[edit] Diversity

Capital One received a 100% rating on the Corporate Equality Index released by the Human Rights Campaign starting in 2003, the second year of the report. Capital One's American division has a large number of foreign-born employees: in 2003 it sponsored more people for H-1B visas than any other financial services company (19th overall),^[3] though in 2005 it was 4th in financial services (34th overall).^[4]

[edit] Controversy

Like most credit card companies that issue cards to people with poor or no credit (called "subprime"), Capital One offers multiple cards with low limits to some consumers, which can result in multiple over-limit and late payment fees and is considered by some consumer advocates to be predatory. ^[5] Defenders of the practice argue that credit issuers should not be held responsible for borrowers' decisions.

To date, Capital One has not disclosed its customers' total credit limits to credit reporting agencies.^[6] This could result in lower credit scores for the company's customers, since it could artificially increase a customer's utilization, a measure of credit balance as a percentage of credit line. Capital One recently announced an end to this practice, and has announced that it will report credit limits to credit reporting agencies by the end of 2007.^[7]

[edit] Business areas

Capital One Financial Corporation is the parent company of Capital One Auto Finance, or COAF, based in Plano, Texas. After buying PeopleFirst, it became the largest Internet auto lender, as well as one of the top US auto lenders overall.

The company, which previously sold auto loans only through direct mail and auto dealerships, lets auto owners refinance existing auto loans and shoppers apply for new auto loans online. A decision usually comes within 15 minutes, after which the buyer receives a "blank check" for up to the approved auto loan amount, which the buyer uses to purchase a car. To the dealership, it is as if the buyer were paying cash. The checks can be used to purchase a new or used vehicle, refinance, or buy out a lease (providing the negotiating power of cash).

COAF sells auto loans across the credit spectrum, then securitizes and resells them.

Unlike other financial service companies of similar size, Capital One is notable for abstaining from student lending.

[edit] Management and corporate governance

Key executives include:

Richard Fairbank Chief Executive Officer, President
Gary Perlin Chief Financial Officer, Executive Vice President, Principal Accounting Officer
John Finneran Executive Vice President, General Counsel, Secretary
Matthew Schuyler Executive Vice President, Chief Human Resources Officer
J. Herbert Boydstun Executive Vice President;President, Banking
Larry Klane Executive Vice President, Global Financial Services
David Lawson Executive Vice President, President and Chief Executive Officer, Capital One Auto Finance
Peter Schnall Executive Vice President, Chief Credit Officer
Gregor Bailar Executive Vice President, Chief Information Officer