Capital One says big bank mergers not always risky

WASHINGTON (Reuters) - Capital One Financial <COF.N> defended its proposed takeover of ING Groep NV's <ING.AS> U.S. online banking portfolio on Tuesday, telling U.S. regulators and community groups that big doesn't necessarily mean risky.

John Finneran, general counsel for Capital One, delivered the defense at the first of three public hearings the Federal Reserve is holding on the $9-billion deal that would create the 7th-largest U.S. bank, by assets, according to SNL Financial.

"Dodd-Frank is clear on a key point: There is no automatic finding of increased risk to our financial system in the event one institution acquires another, even if those institutions are relatively large," he said.

The markets are watching the U.S. Federal Reserve's review as a test case for how the U.S. government will treat big-bank mergers after the financial crisis.

Last year's Dodd-Frank Wall Street Reform and Consumer Protection Act requires U.S. regulators to now take systemic risk into account when evaluating a merger, in addition to public benefit, concentration of resources, unfair competition and other factors.

Community groups such as the National Community Reinvestment Coalition, which has led the charge against the merger, will also testify.

(Reporting by Alexandra Alper; Editing by Derek Caney)