Capital One and Discover Financial Services Merger Gets Regulatory Approval

The Federal Reserve and the Office of the Comptroller of the Currency (OCC) have approved the merger of Capital One and Discover Financial Services, creating the largest credit card issuer in the U.S. This approval marks the largest banking merger in over six years.

Regulatory Approval and Conditions

The Federal Reserve’s decision was based on an evaluation of the companies’ financial and managerial resources, the needs of the communities they serve, and the merger’s impact on competition and financial stability. The Fed also imposed a $100 million fine on Discover for overcharging card interchange fees between 2007 and 2023. The OCC, meanwhile, approved the deal with the condition that Discover implement corrective actions to address past regulatory issues.

What This Means for the Future

The merger, worth $35.3 billion, will give Capital One a combined total of $660 billion in assets. The companies are set to complete the deal by May 18, 2025. Following the transaction, they plan to implement a five-year community investment plan that will provide $265 billion in lending, investment, and philanthropy to underserved U.S. communities, including low-income, rural, and communities of colour.

Impact on Customers and the Industry

While no immediate changes will be made to customers’ accounts, they will be notified well in advance of any future adjustments. Discover’s interim CEO, Michael Shepherd, emphasized that the merger would help increase competition with payment networks like Visa and Mastercard, while also offering more products and improving security.

Antitrust Clearance and Next Steps

The deal has cleared a key hurdle with the Justice Department’s antitrust division, which found insufficient evidence to challenge the acquisition. With regulatory approvals now in place, this merger is poised to reshape the credit card landscape in the U.S.

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