Fitch Affirms Capital One's Long-Term IDR; Outlook Stable

NEW YORK--(BUSINESS WIRE)--Fitch Ratings has affirmed the long-term Issuer Default Rating (IDR) of Capital One Financial Corp. (COF) and its subsidiaries at 'A-'. The Rating Outlook is Stable. Approximately $112 billion of deposits, debt, and hybrid equity is affected by this action. A complete list of ratings is detailed at the end of this release.

The affirmation and Stable Outlook reflect our belief that COF will maintain higher capital levels and enhanced liquidity throughout the economic downturn. COF opportunistically raised approximately $730 million in common equity in September and received a $3.55 billion preferred stock investment from the U.S. Treasury in November, both of which received 100% equity credit from Fitch. We believe tougher economic conditions will drive an increased amount of merger and acquisition activity in the banking industry in coming quarters and expect COF to be a participant should attractive opportunities become available.

From a liquidity perspective, COF had $32 billion in unencumbered securities, un-drawn conduits, and Federal Home Loan Bank (FHLB) capacity as of Sept. 30, 2008. Fitch believes deposit growth combined with flat to declining asset growth will generate additional liquidity in coming quarters.

Concurrently, Fitch has downgraded the Individual ratings of COF and its subsidiaries to 'B/C' from 'B' to reflect reduced profitability expectations in a weaker economic environment. Given Fitch's revised unemployment expectations, we believe COF's earnings will remain under pressure as the bank continues to adjust its loan allowance in anticipation of deteriorating credit performance in 2009. The Individual rating attempts to assess a bank's intrinsic creditworthiness absent any external support.

Credit deterioration beyond current expectations with sustained operating losses, decreased liquidity, or weakening risk-adjusted capitalization could trigger negative rating actions. Conversely, stabilization of segment credit metrics, improvement in the UK credit card portfolio, and a turnaround in the auto business with the development of consistent segment profitability, could provide positive rating momentum.

Fitch has also established a preferred stock rating of 'BBB+' for COF to reflect the $3.55 billion preferred stock investment in connection with TARP.

Fitch has affirmed the following ratings with a Stable Outlook:

Capital One Financial Corp.

--Long-term IDR at 'A-';

--Short-term IDR at 'F2';

--Support at '5';

--Support Floor at 'NF';

--Senior debt at 'A-';

--Subordinated debt at 'BBB+'.

Capital One Bank (USA), National Association

--Long-term IDR at 'A-';

--Short-term IDR at 'F1';

--Support at '5';

--Support Floor at 'NF';

--Senior debt at 'A-';

--Long-term deposits at 'A';

--Short-term deposits at 'F1';

--Subordinated debt at 'BBB+'.

Capital One National Association

--Long-term IDR at 'A-';

--Short-term IDR at 'F1';

--Support at '5';

--Support Floor at 'NF';

--Senior debt at 'A-';

--Long-term deposits at 'A';

--Short-term deposits and short-term debt at 'F1';

--Subordinated debt at 'BBB+'.

Capital One Capital II, III, IV

--Trust Preferred at 'BBB+'.

Hibernia Corporation

--Subordinated debt at 'BBB+'.

North Fork Bancorporation, Inc.

--Subordinated debt at 'BBB+';

--Preferred Stock at 'BBB+'.

North Fork Capital Trust II

--Trust Preferred at 'BBB+'.

Fitch has downgraded and assigned Stable Outlooks to the following:

Capital One Financial Corp.

Capital One Bank USA, NA

Capital One National Association

--Individual downgraded to 'B/C' from 'B'.

Fitch has assigned the following with a Stable Outlook:

Capital One Financial Corporation

--Preferred Stock 'BBB+'.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.