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The US has approved Capital One’s $35.5bn takeover of Discover Financial in a deal that will merge two of America’s largest credit card lenders and marks one of the largest banking mergers since the 2008 financial crisis.
The Federal Reserve Board and the Office of the Comptroller of the Currency on Friday announced their approval of the merger. The OCC said they have done a “careful analysis of the effect of the merger on communities, the banking industry, and the US financial system.”
The approval marks the first major bank merger in over five years and signals a renewed openness to consolidation under the Trump administration.
The tie-up of Virginia-based Capital One and Illinois-based Discover, agreed in 2024, faced intense scrutiny from US lawmakers and the Biden administration, which had warned that greater consolidation led to worse consumer outcomes.
Capital One made the argument that the deal would enhance Discover’s credit card network and improve competition against credit card networks Visa, Mastercard and American Express.
The US has an unusually fragmented banking industry, with more than 4,000 banks, and has faced regular calls for greater consolidation.
Richard Fairbank, founder and chair of Capital One, on Friday called the approval an “exciting moment” for the two companies. “We understand the critical importance of a strong and competitive banking system to our customers and our economy,” he added.
The Fed board also said that it had entered a consent order with Discover and assessed a $100mn fine for overcharging interchange fees from 2007-2023. The OCC said its approval was based on Capital One providing a plan of corrective actions “to address the root causes of any outstanding enforcement actions against Discover Bank and remediation of harm”.
Michael Shepherd, the interim chief executive of Discover, said the merger will “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 expect to close the deal on May 18.
