Capital One Financial this afternoon said its former senior executives, John Kanas and John Bohlsen, agreed to pay $20 million to settle claims that they violated a noncompete agreement, a deal reached nearly a year after the McLean-based bank filed a lawsuit against the pair.
Under the terms of the settlement, Kanas, now chairman and chief executive of BankUnited, and Bohlsen, BankUnited’s vice chairman and chief lending officer, denied any liability and made no admission of wrongdoing.
They have agreed to hold off opening any bank branches in New York, New Jersey or Connecticut until January 2013. Kanas and Bohlsen also agreed to refrain from playing any role at Herald National Bank of New York, which BankUnited purchased last June, for the next six months. Until then, Herald must continue to operate as a separate entity from its new owners.
BankUnited, not a party to the lawsuit but bound to the settlement, has also agreed to not hire any Capital One employees or solicit the bank’s customers until Jan. 31, 2013.
The settlement comes a month after a judge in the Eastern District of Virginia rejected Kanas and Bohlsen’s petition to void the noncompete agreement, deeming the contract fully enforceable.
“Capital One was pleased with the decision of the federal court, which affirmed the validity of the non-competition agreements that were negotiated in good faith. We are also pleased with the terms of the settlement,” said Capital One spokesperson Tatiana Stead.
The case stems from Capital One’s 2006 acquisition of North Fork Bank, where Kanas and Bohlsen held C-suite positions. According to court records, the two inked an agreement not to compete with Capital One in New York, New Jersey and Connecticut.
Following the completion of the merger, Kanas became a director of Capital One Bank, while Bohlsen headed its commercial banking division. Within a year, the two exited from the bank. Two years later, Kanas and Bohlsen led a group of investors in acquiring the assets of BankUnited from the Federal Deposit Insurance Corp.
At the time, BankUnited only had branches in Florida, though the bank held assets in New York. Kanas and Bohlsen ruffled Capital One’s feathers with the acquisition of Herald National, a transaction that would place BankUnited in head-to-head competition with Capital One in the tri-state region.
Kanas told Capital Business that he is content with the settlement as it is in the best interest of BankUnited.
“It clears the path for us to begin to do business in the northeast, so we are very pleased,” he said. “It was always our intention that when the noncompete expired we would begin to pay more attention to the northeast. Our first entree into New York will be the three branches we’re opening in Manhattan and then we’ll see what kinds of opportunities exist beyond that.”