By Chris Prentice and Saeed Azhar
NEW YORK (Reuters) -The Federal Reserve and Office of the Comptroller of the Currency said on Friday they have approved the merger of Capital One and Discover, paving the way for the two firms to become the eighth-largest bank in the United States.
The regulators said they have done a “fulsome review” of the banks’ 2024 application, approving a deal set to create the biggest U.S. credit card issuer by balances, and give Capital One control of Discover’s extensive card payment network. The two will become the eighth-largest bank covered by government deposit insurance, the Fed said.
The proposed deal has been closely watched by financial executives, who see it as a litmus test for how quickly the Trump administration will approve mergers in a sector they see as ripe for consolidation.
In a joint statement, Capital One and Discover said, with all the necessary regulatory approvals now received, they expect to close the deal on May 18, 2025.
The combination “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,” said Michael Shepherd, interim CEO and president of Discover.
The OCC said in its statement its approval is conditioned on plans for corrective actions to address the “root causes” of any outstanding enforcement actions against Discover Bank.
Separately, the Fed said it has entered a consent order with Discover and assessed a fine of $100 million for overcharging certain fees from 2007 to 2023.
The Justice Department previously concluded there were not competition concerns sufficient enough to block the deal, according to news reports.
(Reporting by Chris Prentice and Saeed Azhar in New York, Editing by Franklin Paul)
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