The merger process is expected to be completed by May 18, with the transaction having received backing from shareholders.
The Federal Reserve Board has given its approval for Capital One Financial Corporation’s merger with Discover Financial Services in a $35.3 billion deal, the central bank said in an April 18 statement.
The transaction involves Discover Bank merging with Capital One’s national bank subsidiary Capital One, National Association (CONA), with CONA becoming the surviving entity, according to the Fed order.
At present, Capital One is the 11th largest bank in the United States, controlling $362.7 billion in consolidated deposits, representing 2 percent of the total amount of deposits at banks in the country.
Discover is the 32nd largest bank in the nation, controlling around $107.2 billion in consolidated deposits, less than 1 percent of the total deposits at American banks.
Post merger, Capital One is set to become the eighth largest bank in the United States, with the combined entity’s deposits making up 2.6 percent of total deposits in U.S. banking institutions, said the order.
Discover and Capital One are also major players in the U.S. credit card market. As such, the merged entity is expected to exhibit an even stronger presence in the credit card industry.
The Federal Reserve Board said that before approving the deal, it evaluated the merger application based on various factors such as “the financial and managerial resources of the companies, the convenience and needs of the communities to be served by the combined organization, and the competitive and financial stability impacts of the proposal.”
The board also entered into a consent order with Discover, assessing a fine of $100 million on the entity for overcharging certain fees to customers between 2007 and 2023.
Discover has already terminated these practices and is paying back the collected fees to affected customers, the Fed said.
“As a condition of the Board’s approval of the merger application, Capital One has committed that it will comply with the Board’s action against Discover, including remediation requirements.”
On Friday, the Office of the Comptroller of the Currency (OCC) also announced it has conditionally approved the merger.
