In the biggest bank merger since the 2008 financial crisis, the Federal Reserve Board and Office of the Comptroller of the Currency have approved Capital One’s acquisition of Discover Financial Services. The $35.3 billion all-stock transaction, announced in February 2024, is set to close on May 18, 2025.

Under the deal terms, Discover shareholders will receive 1.0192 Capital One shares for each Discover share—representing a 26% premium over Discover’s closing price at announcement. Once completed, Capital One shareholders will control 60% of the combined entity, with Discover shareholders owning the remaining 40%.

Regulatory approval came with significant conditions. The Federal Reserve issued a consent order against Discover with a $100 million fine for overcharging interchange fees, while the FDIC imposed a separate $150 million penalty for similar violations. Capital One must address these issues and submit corrective action plans to regulators.

The merger will create the largest U.S. credit card issuer by outstanding balances and the nation’s eighth-largest bank with approximately $638 billion in assets. This strategic combination gives Capital One direct access to Discover’s payment network infrastructure as it positions itself to challenge banking giants JPMorgan Chase, Bank of America, and Citigroup.