Capital One Financial announced Wednesday a $2.6 billion deal for the U.S. credit card portfolio of London-based HSBC Holdings, a move that would make the McLean firm the nation’s third-largest issuer of private label, or store branded, plastic.
The deal puts Capital One at the forefront of a niche market it only entered into at the start of this year. The company made its foray into the space in January by picking up the credit card portfolio of Canadian retail conglomerate Hudson’s Bay Co. That deal was followed up in April when J.P. Morgan Chase sold Kohl’s Department Stores’s card portfolio, handing over more than 20 million accounts and the right to issue cards to Kohl’s customers.
After the HSBC sale is finalized, Capital One would issue cards for such retailers as Saks Fifth Avenue, Neiman Marcus and Best Buy.
Analysts said the store-brand credit card business is rebounding, after a precipitous decline during the downturn. Delinquencies and charge-offs have slowed in the past year, while stricter standards on traditional cards have made store cards more appealing to consumers.