New York: Capital One Financial Corp today said it will acquire Chevy Chase Bank for USD 520 million in cash and stock, expanding its presence in its own backyard. Under the terms of the agreement, McLean, Virginia -based Capital One will use USD 445 million in cash and 2.56 million shares of Capital One valued at USD 75 million, or about USD 29.30 per share.

Shares of Capital One fell 29 cents to USD 31.30 in early morning trading. Rumors about a possible buyer for privately held Chevy Chase had been circulating for several weeks. Citigroup Inc was among the bidders reportedly looking to acquire the Bethesda, Maryland-based regional bank. Citi at the time declined to comment on its interest in Chevy Chase. Citi's sharp stock slide last month that required billions of dollars in support from the federal government to stave off a cash squeeze likely took it out of the running to acquire Chevy Chase Bank, according to one analyst.

"Citi's stock got crushed," said David Hendler of CreditSights. "They couldn't do the stock deal anymore. They couldn't do it for cash given their capital. Citi has to work on its own internal situation to right its stock." Unlike Citi, Capital One has remained profitable during the ongoing credit crisis and has been able to tap capital markets in recent months to help boost its capital reserves. Chevy Chase Bank, which has about USD 11 billion in deposits, operates branches in Maryland, Virginia and Washington, DC Capital.

Source : PTI