Mega Merger: Capital One and Discover Combine to Dominate U.S. Credit Scene

The Federal Reserve and the Office of the Comptroller of the Currency have approved the merger of Capital One and Discover, forming the largest U.S. credit card issuer by balances. Conditions include corrective actions for Discover. The Justice Department found no competition issues blocking the deal, seen as an industry consolidation indicator.

The Federal Reserve and the Office of the Comptroller of the Currency have given the green light for the merger of Capital One and Discover, signaling a milestone in the banking sector. This union is poised to create America's leading credit card issuer by balances, and one of the largest banks by assets.

Despite the approval, the Office of the Comptroller of the Currency has mandated corrective actions for Discover, addressing the root causes of remaining enforcement issues. Meanwhile, the Federal Reserve announced a consent order with Discover, imposing a $100 million fine related to fee overcharging from 2007 to 2023.

The Justice Department had already determined there were no competitive concerns threatening the deal's success. Analysts and financial executives view this merger as a significant test of the Trump administration's stance on banking industry consolidation.

(With inputs from agencies.)