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Capital One Bank - say buh bye!
NEW YORK (Reuters) - Capital One Financial Corp (COF.N: Quote, Profile , Research) on Monday said it will eliminate 1,900 jobs and shut down a wholesale mortgage unit it acquired less than a year ago, as it struggles with the U.S. housing downturn.
The closure of GreenPoint Mortgage Inc. will result in an $860 million charge, or $2.15 per share, and Capital One slashed its 2007 earnings forecast. Shares fell in after-market trading but then rose as investors cheered the company's exit from an increasingly risky business.
"There's some short-term pain. You never want to have to write down assets. But it's a long-term positive, because this operation was one of the main concerns facing the company," said Peter Kovalski, analyst covering financial services stocks at Alpine Woods Capital Investors, which owns Capital One shares.
McLean, Virginia-based Capital One, best known as a credit card issuer, is the latest lender to get hit by the U.S. mortgage crisis, where rising defaults by borrowers have made investors less willing to buy repackaged home loans.
Capital One plans to close GreenPoint's headquarters in Novato, California, and shut 31 offices in 19 U.S. states. It expects to take most of the charge for the closure in 2007.
"GreenPoint has run into unforeseen circumstances that are beyond its control," said Richard Fairbank, chairman and chief executive at Capital One
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