Capital One Financial Corp.
) completed the sale of certain private label and co-branded
credit card accounts to
). These card portfolios - worth nearly $6 billion in receivables
- were related to electronics retailer
Best Buy Co Inc.
Capital One had announced the deal in Feb 2013.
Though the financial terms were not disclosed, the deal will have
a neutral impact on Capital One's earnings. Further, Capital One
and Best Buy terminated the contractual credit card relationship
that these companies shared.
Moreover, with the closure of the deal, Capital One will likely
be initiating its share repurchase program. The company, in Jul
2013, had announced a share repurchase program worth
approximately $1 billion through Mar 2014 following the approval
of its capital plan in March.
Additionally, in consistence with its capital plan, Capital One
hiked its quarterly dividend by 500% to 30 cents per share in
May. Notably, this was the first time the company hiked its
dividend and announced a share buyback program since the
Though Capital One decided to vend this credit card portfolio,
the company had acquired a total of 23 such retail partnerships
when it closed a deal to buy
HSBC Holdings plc
) U.S. credit card portfolio in 2012.
The company entered the store-branded credit card market in
Jan 2011 with the acquisition of Hudson's Bay Company credit card
portfolio and related assets from GE Capital Retail Finance. This
was followed by the buyout of another private-label credit card
portfolio from Kohl's Department Stores in Apr 2011.
CITIGROUP INC (C): Free Stock Analysis Report
CAPITAL ONE FIN (COF): Free Stock Analysis
HSBC HOLDINGS (HBC): Free Stock Analysis
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However, with the divestiture of Best Buy's card portfolio,
Capital One is expected to face additional revenue growth
challenges. Further, persistent rise in operating expenses
remains a matter of concern.
Currently, Capital One carries a Zacks Rank #3 (Hold).