While today's treasurers are expected to make a concrete contribution to shareholder value, taking on a raft of strategic roles, it's still rare to see a treasury team take center stage in a $15 billion acquisition–the way Capital One's team did when the financial services company bought North Fork Bank last year. The deal was a key part of the company's strategy to add branch banking to its existing portfolio of consumer financial services, says Capital One CFO Gary Perlin: "By acquiring North Fork Bank in 2006, we not only added a leading institution in one of the most attractive deposit markets in the U.S., we also achieved the balance in funding and business mix we had been targeting."

The deal made strategic sense–but only if certain risks could be managed. Foremost among these was the real possibility that a shift in interest rates could affect the way stakeholders would view the deal. Simply put, if North Fork's market value fell after the acquisition was announced, Capital One would have been forced to record additional goodwill on its balance sheet at deal's end; if goodwill increased, the company's capital ratios and return on equity would have fallen. As a mortgage lender and deposit taker, North Fork's revenues and market value were sensitive to changes in rates and, during the eight months it took to close the deal, there was enormous uncertainty about the outlook for rates. "Creativity, collaboration and hard work were needed across multiple areas of the finance function," says Perlin.

As soon as the deal was announced, a core team of seven within treasury set to work stabilizing the economics of the acquisition. Led by Vincent Pennisi, head of Capital One's financial risk management group, they first analyzed the sensitivity of North Fork's $50 billion balance sheet to different rate scenarios–a task they ploughed through in a single week. "I don't think anyone slept much that week," Pennisi jokes. "It was an extremely aggressive timetable. Even though we had experience with similar dynamics from the Hibernia acquisition, and we had a good sense of the questions we needed to answer, the whole team needed to show great dedication and analytical rigor to actually get the work done in the short timeframe we had."

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