Capital One and Discover jump after getting green light to close their $35 billion megamerger
The tie-up will create the sixth-largest US bank and could reshape the credit card landscape.
Shares of Capital One and Discover ticked higher on Monday, defying the broader market slump, after US banking regulators signed off on their $35 billion megamerger.
The approval from the Office of the Comptroller of the Currency and the Federal Reserve, which landed on Friday during the stock market holiday, cleared the final regulatory hurdle for the deal. It paves the way for Capital One to absorb Discover and become the sixth-largest US bank, with more than $650 billion in assets. The deal was first announced in February of last year.
As part of the approval, Capital One agreed to comply with an existing consent order including a $100 million penalty Discover was hit with for overcharging certain interchange fees between 2007 and 2023.
More than just a size boost, the merger gives Capital One something it’s never had: its own card network. Discover’s payment network is one of the few that rival Visa and Mastercard(the largest credit card processors in the world), giving the company a stronger hand in a tightly consolidated space.
The deal could help spark optimism for other bank stocks — especially if it signals that the Trump administration is taking a more merger-friendly stance after recent market volatility cast doubt on the dealmaking space. Capital One expects the deal to close in May, pending standard market conditions.
