Capital One Bank’s (COF) $35 billion acquisition of Discover (DFS) just got the go-ahead from key regulators, paving the way for the creation of the largest U.S. credit card company.
The two regulators tasked with approving the deal — the Federal Reserve and the Office of the Comptroller of the Currency — said Friday they had approved the deal based on the companies meeting a number of final conditions.
“Based on the foregoing and all the facts of the record, the Board of Governors has determined that the proposal is approved and hereby approves it,” Ann Misback, secretary of the Federal Reserve Board of Governors, said in the agency’s order.
“This approval is based on a thorough review of all available information,” the Office of the Comptroller of the Currency’s Large Bank Licensing said in its order.
The Fed and the OCC issued separate statements saying they believe the merger complies with their statutory merger approval rules.
Specifically, the regulators found that combining the two companies would not substantially lessen competition, would not harm the convenience and demand of the communities served by the two banks, would not reduce the ability of the two institutions to combat money laundering, and would not create additional risks to the banking industry and the broader U.S. financial system.
The OCC said in a statement that it believes the merger complies with the Bank Merger Act.
The Fed’s approval of the merger came with a consent order and a $100 million fine for Discover overcharging customers for certain interchange fees between 2007 and 2023. The Fed said Discover has since ended those practices and is reimbursing affected customers for those fees.
The OCC said its approval was conditional on Capital One providing it with a plan “to address the root causes of any pending enforcement actions against Discover Bank and to develop a plan to remedy the harms.”
Previously, the Delaware Banking Commissioner approved the merger in December 2024, and shareholders of both companies approved the merger in February of this year.
New largest lender
If Capital One acquires Discover, Discover will become the largest credit card issuer in the United States by loan volume, even surpassing banking giant JPMorgan Chase. Capital One is known for its ubiquitous TV ads that ask, “What’s in your wallet?”
The combined bank is expected to have combined assets of about $637.8 billion, making it the eighth-largest insured depository institution and the sixth-largest nationally chartered U.S. bank, according to regulators.
In a joint statement from the two banks, Capital One CEO Richard Fairbank said the approval was an “exciting moment.”
“We understand that a strong and competitive banking system is critical to our customers and our economy, and we appreciate the thoughtfulness and diligence that regulators have shown in their thorough review of this transaction over the past 14 months,” he said.
All necessary regulatory approvals have now been received, and the transaction is expected to close on May 18, 2025, subject to customary closing conditions, according to Capital One.
Capital One and Discover reported first-quarter earnings Tuesday afternoon.
David Hollerith is a senior reporter at Yahoo Finance, covering banking, cryptocurrency and other areas of finance.
