Capital One’s (COF) $35 billion purchase of Discover (DFS) just got the green light from key regulators, paving the way for the formation of the biggest credit card company in the US.
Two regulators responsible for the deal’s approval — the Federal Reserve Board of Governors and the Office of the Comptroller of the Currency (OCC) — said Friday that they had approved the transaction, based on the companies meeting a few final conditions.
“Based on the foregoing and all the facts of record, the Board determines that the proposal should be, and hereby is, approved,” Ann Misback, Federal Reserve System Board of Governors secretary, said in the agency’s order.
“This approval is granted based on a thorough review of all information available,” the OCC’s Large Bank Licensing office said in its order.
The Fed and OCC said in separate statements that they concluded the merger is consistent with their statutory merger approval rules.
Specifically, the regulators found that combining the two companies would not substantially lessen competition, jeopardize the convenience and needs of the communities either of the banks serve, reduce the effectiveness of either institution’s ability to combat money laundering, or bring more risk to the banking and wider US financial system.
The OCC said in its statement that it concluded the merger is consistent with rules laid out in the Bank Merger Act.
The Fed’s approval of the merger also came with a consent order and a $100 million fine for Discover overcharging customers certain interchange fees from 2007 through 2023. Discover has since terminated these practices and is repaying those fees to affected customers, the Fed said.
The OCC said its approval was conditional on Capital One providing it with a plan “to address the underlying root causes of any outstanding enforcement actions against Discover Bank and plans for remediation of harm.”
These approvals of the merger follow others from the Delaware State Bank Commissioner in December 2024 and by each company’s shareholders back in February.
A purchase of Discover by Capital One would make the biggest credit card issuer in the US by loan volume, bigger than even banking colossus JPMorgan Chase (JPM) by that measure. Capital One is well known for its ubiquitous TV ads that ask, “What’s in your wallet?”
The combined bank is expected to have consolidated assets of approximately $637.8 billion, making it the country’s eighth-largest insured depository institution and sixth-largest nationally chartered US bank, according to regulators.
