By Rebecca Ungarino

Two top U.S. banking regulators on Friday approved Capital One's $35.3 billion all-stock bid to buy Discover Financial Services, clearing the final regulatory requirements the two companies needed to close the merger and create the sixth-largest U.S. bank.

The Office of the Comptroller of the Currency and the Federal Reserve Board, which oversee U.S. lenders, said that they had approved the proposed deal that was announced in February 2024. The banks said they plan to close the deal, which shareholders and a key Delaware bank regulator have approved, on May 18.

The merger has faced opposition from consumer advocacy groups and Democrats, including Sen. Elizabeth Warren of Massachusetts and former Sen. Sherrod Brown of Ohio, who said the tie-up would hurt competition, particularly in credit cards, and lead to higher costs for consumers.

Capital One and Discover have disputed that, saying the credit card market will remain competitive and that their merger can offer more products and increase competition as a more formidable rival to dominant payment companies like Visa and American Express.

On Friday, Capital One Chief Executive Richard Fairbank said the companies "understand the critical importance of a strong and competitive banking system to our customers and our economy." Michael Shepherd, Discover's interim CEO and president, said the combination will "bring meaningful community benefits."

McLean, Va.-based Capital One and Discover, which is based in Riverwoods, Ill., are the ninth- and 27th-largest banks in the U.S., according to Federal Reserve data. The two banks are scheduled to report their first-quarter financial results next week.

Write to Rebecca Ungarino at rebecca.ungarino@barrons.com

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April 18, 2025 13:22 ET (17:22 GMT)

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