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The story of Capital One is very short and oh so very sweet. It is the story of two entrepreneurs that ventured into a sure-to-fail business, only to succeed at the highest level possible. Many have gone into the business of monoline financial services, and all ended being gobbled up by larger companies during down periods. But not Capital One. Capital One would venture into the retail banking market and eat up smaller entities themselves.
From Start Up to Super Power
Starting as an offshoot of Signet Banking Corp – a Richmond, Virginia-based bank – Capital One is the brainchild of Richard Fairbank and Nigel Morris. Fairbank, a Stanford graduate and Morris, a East London graduate would come together to transcend the banking into the information age. The company would only enter the retail banking industry in 2005, but their influence in the nation's advancements in banking are vast.
Under the guidance of Morris, Capital One would usher in information-based strategies that would change the consumer lending business forever. With advanced statistical marketing techniques and budding information technologies tailoring products for subprime consumers, Capital One would be able to produce great returns for investors. In the 10-year period Morris was at the top of Capital One, stock would jump from below $5 a share to nearly $86 a share. They were able to reduce costs to potential borrowers, extend capital to borrowers otherwise ignored, and expand internationally. Sales would grow 40% annually and earnings per share would surpass 20%. Morris would retire in 2004, but upon his departure from Capital One, the company would manage over $80 billion in loans to 50 million customers and would generate $1.5 billion in earnings. The company would be worth over $20 billion.
Fairbank is still with Capital One and is the current Chairman and CEO. Fairbank's resume speaks for itself. He, along with Morris, took a small start up financial institution and developed it into one of the major banks in the United States. He has been awarded a multitude of awards and honors including:
- The Washingtonian's "Business Leader of the Year"
- Top 10 CEO's in the Country By Worth's
- One of the Top 50 CEOs in the country by Future Banker's
- Credit Card Management's Entrepreneur of the Year
- Expansion, Mergers, and Division
Starting in the financial service monoline business, once in the retail banking market, Capital One would spend most of the late-2000's acquiring smaller banks and merging. New Orleans-based Hibernia National Bank was first in 2005 along with North Fork Bancorporation in New York. By 2008, Capital One would purchase Chevy Chase Bank, the largest locally-based bank in the Washington Metro area, for $520 million. In February of 2012, Capital One would acquire ING Bank. Also in 2012, Cap One would develop an Auto Finance division, which is the largest internet auto lender in the country.
Saving the best for last, Capital One bid to acquire HSBC's Credit Card division last year. The deal was under review for quite some time but was finally approved this past May. This lone deal expands Capital One's credit card portfolio by $30 billion and makes the company the fourth largest credit card issuer in the country. Currently, Capital One offers a wide variety of personal and small business credit cards. Some of their most recognizable products are the Capital One® Venture® Rewards Credit Card and the Capital One® Spark® Miles for Business. Capital One is now present in the Canadian and English markets.