The United States has given the green light to Capital One’s $35.5 billion acquisition of Discover Financial, which will merge two of the nation’s largest credit card lenders. This transaction represents one of the most significant banking mergers since the 2008 financial crisis.
The Federal Reserve Board and the Office of the Comptroller of the Currency (OCC) announced their approval of the merger on Friday. The OCC stated that it conducted a “careful analysis of the effect of the merger on communities, the banking industry, and the US financial system.”
This approval marks the first major bank merger in over five years and indicates a renewed openness to consolidation during the Trump administration era.
The merger of Capital One, based in Virginia, and Discover, from Illinois, which was agreed upon in 2024, faced rigorous scrutiny from US lawmakers and the Biden administration. They had expressed concerns that increased consolidation could result in negative consumer outcomes.
Capital One contended that the merger would bolster Discover’s credit card network and enhance competition against major credit card networks such as Visa, Mastercard, and American Express.
With an unusually fragmented banking industry comprising over 4,000 banks, the United States has experienced frequent calls for greater consolidation.
Richard Fairbank, founder and chairman of Capital One, described the approval as an “exciting moment” for both companies. He emphasized the importance of a robust and competitive banking system for customers and the economy.
Additionally, the Federal Reserve board disclosed that it had entered a consent order with Discover and imposed a $100 million fine for overcharging interchange fees from 2007 to 2023. The OCC’s approval was contingent upon Capital One presenting a corrective action plan to address the root causes of any outstanding enforcement actions against Discover Bank and to remediate harm.
Michael Shepherd, interim chief executive of Discover, stated that the merger will enhance competition in payment networks, expand the product range for customers, increase innovation and security resources, and provide substantial community benefits. The companies anticipate completing the transaction by May 18.
