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Capital One Financial is progressing with its proposed acquisition of Discover Financial Services, as the Justice Department has indicated it does not foresee significant competition issues that would impede the merger.
This follows the announcement of the $35bn deal in February 2024, which initially raised concerns about its impact on consumers, particularly those without credit histories.
The Justice Department had previously expressed concerns about the merger during the Biden administration, but its investigation continued when President Trump took office, reported the New York Times.
Recently, the department informed the Federal Reserve and the Office of the Comptroller of the Currency that it has completed its review and found no grounds to block the merger, according to anonymous sources.
While the Justice Department cannot approve banking mergers, it can take legal action to obstruct them.
The Federal Reserve and the Comptroller still have the authority to block the merger, but the recent assessment is significant, as analysts expected the Justice Department to raise objections.
Notably, federal banking agencies have not formally rejected a bank merger application since 2003.
During the latter part of the Biden administration, the Justice Department introduced stricter guidelines for evaluating banking mergers, the first update since 2008.
Capital One, with assets of $479bn, is claimed to be the ninth-largest bank in the US.
The acquisition of Discover would give Capital One access to a network of 305 million cardholders, complementing its customer base of over 100 million customers with Capital One-issued cards.
Shareholders have endorsed the all-stock transaction, with expectations to finalise the deal early this year, pending regulatory approval.
"Capital One’s Discover acquisition gains approval from Justice Department" was originally created and published by Retail Banker International, a GlobalData owned brand.
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