Capital One’s $35.5B Discover Takeover Gets Green Light from Regulators, Marking the Largest Banking Merger Since 2008

America’s banking industry is getting a merger that could potentially yield some serious returns. The Federal Reserve and Office of the Comptroller of the Currency have given their stamp of approval for Capital One’sCOF

$35.5B acquisition of Discover FinancialDFS

, creating one of the largest credit card lenders in America. The deal, which was first announced in Feb. 2024, marks the largest banking merger since the 2008 financial crisis and signals a change in how regulators approach consolidation in the financial sector.

• The merger strengthens Discover’s credit card network and boosts competition against VisaV
  , MastercardMA
  , and American ExpressAXP
  .
• Discover shareholders will receive 1.0192 Capital One shares perDFS
  share, giving them a 40% stake in the combined company — the deal offered them a 26% premium to the price on Feb. 16, 2024.

Looking beyond the transaction: Capital One’s Richard Fairbank called the approval an “exciting moment” while acknowledging “the critical importance of a strong and competitive banking system.” As part of the regulatory approval, the Federal Reserve imposed a $100M fine on Discover for overcharging interchange fees between 2007 and 2023, requiring full remediation to affected customers as a condition of the merger moving forward. With the deal expected to close on May 18, this transaction could signal renewed openness to consolidation in America’s unusually fragmented banking industry of more than 4K institutions.