Capital One has committed $265 billion in lending, philanthropy, and community investments if regulators approve its closely scrutinized acquisition of Discover Financial Services.
The $35 billion deal, announced in February, would make Capital One the largest U.S. credit card issuer by balances and the sixth-largest bank by assets, giving it control of Discover’s extensive card payment network. What’s more, the deal would result in Capital One holding around $250 billion in card balances, increasing its market share to 22%, per Reuters.
The new proposal includes $200 billion in lending to consumers and $15 billion in lending to small businesses (with revenue under $1 million) in low- to moderate-income communities. Capital One said that its plan was twice as large as any other community benefits plan (CBP) that accompanies a bank acquisition.
Philanthropic Efforts
In addition to increased lending in lower-income areas, Capital One’s new proposal includes billions in community development financing. It also allocates $575 million in philanthropic donations aimed at boosting homeownership and enhancing AI capabilities among small businesses.
“Our CBP will enable greater access to safe and affordable housing; expand access to credit so small business owners can sustain and grow their businesses; expand programs to help ensure that people have the skills necessary to seek out well-paying jobs and advance their careers; build high quality local infrastructure to facilitate the delivery of essential services; and support the development of schools, civic centers, and healthcare facilities that are vital to building strong and vibrant communities,” Capital One noted.
Satisfying Regulators
It’s not immediately clear if the proposal will be enough to satisfy regulators from the Federal Reserve and the Office of the Comptroller of the Currency (OCC). There have been concerns that the Capital One/Discover deal would continue the centralization of financial services among a few large banks and eventually lead to higher consumer costs.
The Fed and the OCC have scheduled a special meeting on July 19 to discuss the implications of the deal.