Capital One Financial is buying Discover Financial Services for $35 billion, in a deal that would bring together two of the nation’s biggest lenders and credit card issuers. Discover Financial shareholders will receive Capital One shares valued at nearly $140, according to a news release issued by the companies Monday.
FILE - A branch office of Capital One Bank is pictured on May 7, 2009, in New York. Capital One Financial is buying Discover Financial Services for $35 billion, in a deal that would bring together two of the nation’s biggest lenders and credit card issuers, according to a news release issued by the companies Monday, Feb. 19, 2024. FILE - The logo for Capital One Financial is displayed above a trading post on the floor of the New York Stock Exchange, July 30, 2019.
“This marketplace that’s dominated by the big players is going to shrink a little bit more now,” said Matt Schulz, chief credit card analyst at LendingTree.China cuts key interest rate in the latest move to boost its ailing property sectorIt also will give Discover’s payment network a major credit card partner in a way that could make the payment network a major competitor once again. The U.S.
As they run up their card balances, consumers are also paying higher interest rates. The average interest rate on a bank credit card is roughly 21.5%, the highest it’s been since the Federal Reserve started tracking the data in 1994. The additional reserves have weighed on both banks’ profits. Last year, Capital One’s net income available to common shareholders slumped 35% versus 2022, as its provisions for loan losses soared 78% to $10.4 billion. Discover’s full-year profit sank 33.6% versus its 2022 results as its provisions for credit losses more than doubled to $6.02 billion.
Discover has been operating under heightened scrutiny from regulators. Last summer, the company disclosed that beginning around mid-2007, it incorrectly classified certain card accounts into its highest merchant pricing tiers. The company also received an unrelated consent order from the Federal Deposit Insurance Corporation over its customer compliance management.
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