The United States has approved a $35.5 billion acquisition of Discover Financial by Capital One, signifying the merger of two major credit card lenders in the country. This transaction is one of the largest banking mergers since the 2008 financial crisis.
The Federal Reserve Board and the Office of the Comptroller of the Currency (OCC) announced their approval 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 merger is the first major bank consolidation in over five years and suggests a renewed willingness for such actions under the Trump administration’s regulatory approach.
The merger of Capital One, based in Virginia, with Discover, headquartered in Illinois, was agreed upon in 2024 but has been under significant scrutiny from US lawmakers and the Biden administration. Concerns were raised about the potential negative impact on consumers resulting from increased consolidation.
Capital One argued that the acquisition would enhance Discover’s credit card network and foster greater competition against major networks such as Visa, Mastercard, and American Express.
With over 4,000 banks, the US has a particularly fragmented banking industry and has frequently been encouraged to pursue greater consolidation.
Richard Fairbank, founder and chair 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 both customers and the economy.
The Federal Reserve also indicated that it had entered into 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 on Capital One implementing corrective actions to resolve any outstanding enforcement actions against Discover Bank and to remediate harm.
Michael Shepherd, interim chief executive of Discover, stated that the merger would “increase competition in payment networks, offer a wider range of products to our customers, increase our resources devoted to innovation and security, and bring meaningful community benefits.” The companies anticipate closing the deal on May 18.