Capital One Ratings Affirmed by Fitch IBCA - Fitch IBCA
NEW YORK, July 16 /PRNewswire/ -- Fitch IBCA affirms its ratings for Capital One Financial Corp. (COF) and its principal operating subsidiaries, Capital One Bank (COB) and Capital One Bank, FSB (COSB) following today's announcement that the company has entered the subprime automobile finance business through the acquisition of Summit Acceptance Corp. (SAC). Ratings affirmed include: COF's 'F2' short-term and 'BBB+' senior debt; COB's 'F2' short-term and 'A-' senior debt, and the 'F2' short-term and 'A-' senior long-term obligation rating of COSB. Additionally, the 'BBB+' capital securities issued by Capital One Capital I (a COB unit) and the ratings assigned to structured transactions issued through Capital One Master Trust are affirmed.
While the subprime auto sector has undergone significant turmoil over the past three years, the segment does offer attractive long-term growth opportunities for participants capable of maintaining a reasonable balance between appropriate risk/return levels and receivable growth targets. In expanding its product offerings to include this segment, COF will seek to augment SAC's established business model with its sophisticated data modeling capabilities and formal testing methodology. In this context, the acquisition of SAC represents a 'measured' extension of COF's business strategy which is focused on leveraging its ability to develop strong risk/return business lines by applying information based technology and structured testing in the marketing of products and services to consumers. With a modest $260 million in serviced loans, SAC will continue to pursue its existing business plan, although its union with COF will result in the strengthening of its funding base and capital measures.