On Friday, April 18th, the United States approved the acquisition deal of Discover Financial, a credit card company, by Capital One for $35.5 billion.
This transaction will merge two of the largest credit card issuing institutions in the United States, marking one of the largest bank mergers since the 2008 financial crisis.
The Federal Reserve Board and the Office of the Comptroller of the Currency (OCC) announced the approval of this merger on Friday. OCC stated that they have carefully analyzed the impact of the merger on the community, banking industry, and the U.S. financial system.
This is the first approval of a large bank merger in the United States in five years and signals the Trump administration’s open attitude towards banking industry consolidation. The banking industry in the United States is unusually dispersed, with over 4,000 banks across the country.
Capital One and Discover reached a merger agreement in 2024, but the deal has been under strict scrutiny by U.S. lawmakers and the Biden administration. The Biden administration had warned that excessive consolidation in the banking industry could be detrimental to consumers.
Capital One stated that the acquisition of Discover would strengthen their market share in the U.S. credit card market and significantly enhance Capital One’s competitiveness in the payment network sector.
Richard Fairbank, the founder and chairman of Capital One, expressed on Friday that the approval was an “exciting moment” for both companies.
“We understand the importance of a strong and competitive banking system for our customers and the economy,” he added.
The Federal Reserve Board also stated that they have reached a consent agreement with Discover, imposing a $100 million fine on Discover for overcharging interchange fees between 2007 and 2023. The OCC further noted that the approval of this merger was based on Capital One providing a corrective action plan to “address the root causes of ongoing enforcement actions against Discover Bank and compensate for damages that may have been caused.”
Michael Shepherd, the acting CEO of Discover, stated that this merger will “enhance the competitiveness of the payment network, provide customers with a broader range of products, increase our resources investment in innovation and security fields, and bring substantive community benefits.”
Both parties expect to complete the acquisition transaction on May 18th.