The Federal Reserve Bank Board approved Capital One Financial's application to become a bank holding company.

The nation's sixth-largest credit card company, based in McLean, said the Fed's decision allows it to diversify from credit cards and its other businesses, which include auto loans, installment loans and small-business loans. As a bank, it will have access to low-cost consumer deposits, a spokesperson said.

The company will have to restructure some of its operations, such as venture capital and insurance, to conform to bank holding company regulations.

Capital One, founded in 1995, has been talking about buying a bank for several years, and a spokesman says that with the Fed approval it is likely to do so now, since banking is a "natural extension" of its diversification strategy.

The Fed said Capital One is well capitalized, with consolidated assets of $39.8 billion, which makes it the second-largest deposit-holder in Virginia. It will remain well-capitalized after the conversion, the Fed said in a statement. The company had 46.7 million managed accounts and $71.8 billion in managed loans outstanding as of March 31.


CapitalSource of Chevy Chase, a commercial finance company, said it acquired CIG International, a District-based specialty lender that provides subordinated debt financing to residential real estate developers, for $97.5 million. CIG will operate as part of CapitalSource's structured finance group, which supervises its real estate lending activities. CapitalSource will retain substantially all of CIG's employees.

DiamondRock Hospitality of Bethesda said it completed a $210 million private placement of stock. A lodging investment company spun off from Marriott International, DiamondRock will use the proceeds from this initial offering to acquire and invest in hotels. Marriott has purchased $30 million of DiamondRock's shares.

American Capital Strategies, a Bethesda buyout fund, said it invested $33 million in one of its portfolio companies, Chronic Care Solutions, for a total investment of $78 million. CCS Medical is American Capital's largest investment, at about 3 percent of its assets. CCS Medical sells diabetic, respiratory, ostomy and urological products.

BAE Systems North America, a Rockville high-tech defense contractor, agreed to buy Practical Imagineering for $8.3 million in cash. PI is a private government contractor based in Reston and is involved in signal processing systems and software development. The 10-year-old company employs more than 30 engineers and scientists.

Mid Atlantic Medical Services, a Rockville-based subsidiary of UnitedHealthcare, is eliminating 40 jobs by Sept. 15 to streamline its physician-credentialing operations. Credentialing will be centralized in a UnitedHealthcare office in Ohio. MAMSI intends to place the workers in other jobs within the HMO.

Manugistics Group of Rockville, a provider of supply-chain management software, said AEON Group, one of Japan's largest retailers with more than 3,000 stores globally, is implementing Manugistics' solutions to help build its supply-chain management system.


SuffolkFirst Bank, a Suffolk state-chartered bank, said it completed an offering of 150,000 shares of common stock to existing shareholders and a public offering of 623,882 common shares, all at $8.50 per share. The offerings raised $6.6 million before deducting commissions and other expenses. The bank's stock also began trading last week on the Nasdaq Small Cap Market under the symbol SUFB.

XO Communications, a Reston provider of telecommunication services to companies, named Fredrik G. Gradin and Robert L. Knauss to the board as independent directors who will serve on the audit committee. Gradin is president and chief executive of Explorer Group, an investment management company, and Knauss is an independent director at New York Stock Exchange-traded investment funds Equus II and the Mexico Fund.

Cardinal Financial of Tysons Corner said it completed its $17 million cash acquisition of George Mason Mortgage from United Bank-Virginia, a wholly owned subsidiary of United Bankshares. GMM, based in Fairfax, originates and buys residential mortgages for sale in the secondary market through nine retail branches in the region.

Capital One Financial, based in McLean, wants to diversify beyond its credit card and lending businesses and become a bank holding company.