CAPITAL One will officially acquire Discover, making for a significant shift in the financial services industry.
The highly anticipated deal was approved on Friday, over a year after it was originally proposed.
The Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve System made it official.
All required regulatory approvals were received, and the transaction is expected to be finalized on May 18, per a press release.
The total purchase cost for the acquisition was cited at $35 billion.
Richard Fairbank, founder, chairman, and CEO of Capital One, emphasized that the merger was carefully decided upon.
“This is an exciting moment for Capital One and Discover,” Fairbank noted in Friday’s release.
“We understand the critical importance of a strong and competitive banking system to our customers and our economy, and we appreciate the thoughtful and diligent engagement of our regulators as they thoroughly reviewed this deal over the past 14 months.”
“I am grateful to the thousands of associates across Capital One and Discover who have worked tirelessly to help us achieve this significant milestone,” he added.
“We look forward to bringing these two great companies together with a profound sense of possibility and responsibility to deliver for our customers, associates, shareholders, and communities.”
Michael Shepherd, interim CEO and president of Discover, also explained that the merger would “increase competition in payment networks.”
Not only that, but customers would get a “wide range of products” and see increases in “resources devoted to innovation and security, and bring meaningful community benefits.”
They can also rest assured that there will be no changes to Capital One or Discover accounts for the time being or in the immediate few months after the acquisition closes on May 18.
Capital One said it would first “provide customers with comprehensive information regarding relevant conversion activities well in advance of any future change,” per the release.
After the merger is finished, Capital One also said it would begin its five-year Community Benefits Plan (CBP) as well.
It was created with the acquisition in mind, and with the help of some community organizations, it will allow for about $265 billion to be put into lending, investment, and other services to “advance economic opportunity and financial well-being across America.”
The combination of our two great companies will increase competition in payment networks, offer a wide range of products to our customers, increase our resources devoted to innovation and security, and bring meaningful community benefits.
Michael ShepherdInterim CEO and President of DiscoverLONG TIME COMING
News of Capital One acquiring Discover broke in February of last year.
While there were concerns that it would make Capital One a financial powerhouse, there was room to offer more card options to customers from Visa and Mastercard.
This will seemingly still be the case, and Discover cards will continue to be offered through Capital One.
Discover is also going to operate on its network.
It had even previously turned down merger opportunities from other financial services and tech giants before Capital One’s because they wouldn’t have been able to do so in the agreements.
FINANCIAL WOES
Both Capital One and Discover had seen significant profit declines around the time the merger was announced.
Fourth-quarter profits from 2023 had dipped 43% for Capital One and 62% for Discover, respectively.
Some financial experts attributed the struggles to high interest rates for credit cards and mortgages, increasing the potential for consumers to default on loans.
Discover also stopped offering student loan applications last year.
It had been trying to sell it, but it’s unclear if student loans will be offered again after the merger is finalized next month.
Other banks are facing mass branch closures this year.
A popular financial institution with over 400 branches confirmed it would shutter at least 50 locations by the end of 2025.
Chase, Bank of America, and TD have also closed a combined 272 branches.
Read More Details
Finally We wish PressBee provided you with enough information of ( Capital One and Discover’s huge merger may mean account changes – but company promises it won’t be ‘immediate’ )
Also on site :
- French leftists cry foul as Israel nixes visit
- Meeting with the Exporters and Investors Club
- Senior leaders are feeling the burden of cuts to middle management