Capital One sells savings business to Skipton

Capital One today announced that it was exiting the deposit market following the sale of its savings business to Skipton Building Society for an undisclosed sum.

The group, which did not reveal how many savings customers it had or the value of their deposits, will instead focus on its core credit card business.

Brian Cole, interim managing director of Capital One Bank Europe, said: "As a corporation, Capital One has a strong and flexible funding portfolio, which provides solid alternative sources of funding.

"This means we can fund the UK business more efficiently through our parent than by operating a stand-alone UK savings business."

The group had previously offered two instant access savings accounts and one fixed rate bond, paying a return of 3.3%.

Mr Cole said Capital One had written to all its savings customers, informing them that the sale had been agreed, and that their accounts would be transferred to Skipton by the end of July, subject to court hearings.

The deal is likely to provide a significant boost to Skipton at a time when banks and building societies have become increasingly reliant on using their savers' money to fund mortgage lending.

Skipton is the UK's fifth largest building society, with 860,000 customers and assets of more than £16 billion.

It recently took over its smaller rival, Scarborough Building Society, following a weakening in the latter's capital position.

Kevin Mountford, head of banking at moneysupermarket.com, said: "It is no surprise that in current market conditions we are seeing further mergers and acquisitions between banks and building societies.

"Savers must keep their wits about them and a close eye on the details, but this should generally have a positive outcome for existing Capital One customers as Skipton offers a wider range of savings products with competitive rates."

He added that savers who had accounts with both Capital One and Skipton should check that their total balances did not exceed the limit covered by the Financial Services Compensation Scheme of £50,000 for single account holders and £100,000 for joint accounts.