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.
“This approval is granted based on a thorough review of all information available,” said a letter from the OCC’s Large Bank Licensing office.
The OCC said in its statement that it concluded the merger is consistent with rules laid out in the Bank Merger Act.
Specifically, the regulator 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.
Approval of the merger also came with a consent order with Discover and a $100 million fine for 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.”
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 bank, according to the Federal Reserve.
Capital One would also gain a sizable credit card payment network of more than 300 million cardholders, allowing it to more heavily influence the fees that merchants pay when consumers swipe their cards at the register.
“The OCC is committed to a regulatory framework that expands access to financial services for consumers, businesses and communities,” Acting Comptroller of the Currency Rodney Hood said in a statement with the release.
All required regulatory approvals to complete the transaction have now been received, and the transaction is expected to close on May 18, 2025, subject to the satisfaction of customary closing conditions, according to Capital One.