Latest news with #MichaelShepherd
Yahoo
20-05-2025
- Business
- Yahoo
Capital One Acquires Discover, Reshapes U.S. Credit Card Industry
After almost 15 months of announcing an agreement to acquire Discover Financial Services, Capital One COF has finalized the takeover. The $35-billion transaction reshapes the landscape of the credit card industry, creating a behemoth (in terms of loan volume).With the deal completion, Capital One is well-placed to capture a bigger share of spending on cards and compete with well-known card issuers – Visa V and Mastercard MA. Further, the company now has control of Discover's payments network—one of only four in the United States. This will enable it to generate greater revenues from interchange fees and offer independence from the Visa-Mastercard path to completion was far from smooth. While Capital One and Discover shareholders approved the transaction in February, the deal underwent extensive regulatory scrutiny. Final approval came last month from the Federal Reserve and the Office of the Comptroller of the Currency, after the U.S. Department of Justice opted not to challenge the the green light came with conditions: Capital One must address outstanding enforcement issues tied to Discover. In 2023, Discover revealed that it had overcharged merchants on certain credit card transactions since 2007—a disclosure that drew regulatory attention and required corrective One's acquisition of Discover signals a new era in consumer finance, potentially reshaping competition and innovation across the credit card and payments landscape. Under the terms of the agreement, Discover shareholders received 1.0192 Capital One shares for each Discover share. Also, three members from Discover's board of directors – Thomas G. Maheras, Michael Shepherd and Jennifer L. Wong – have joined Capital the time of the announcement (February 2024), it was noted that the Capital One-Discover merger will likely generate and deliver attractive accretion and returns for shareholders. Expense synergies of $1.5 billion in 2027, coupled with network synergies of $1.2 billion, underscore the value-creation potential of the merger. The transaction will result in a more than 15% accretion to adjusted non-GAAP EPS by transaction will also bolster Capital One's balance sheet. On a pro forma basis, the combined entity would have a CET1 ratio of roughly 14% at closing. At present, there will be no change to the Capital One and Discover customer accounts and banking relationships. All the customers will be provided with comprehensive information in advance of any changes. Additionally, Capital One plans to continue to offer Discover credit card products as Discover-branded cards as well as the other consumer cards currently offered by Capital One. Capital One's "Digital First" banking model, characterized by its iconic customer experience and fee-free offerings, will be bolstered by Discover Financial's national direct savings bank. This synergy will increase the combined company's ability to compete with the nation's largest banks while accelerating national banking the years, COF has pursued a strategic acquisition strategy to diversify its offerings and expand its market presence. Some of the notable ones are ING Direct USA, HSBC's U.S. Credit Card Portfolio and TripleTree. These acquisitions have been instrumental in transforming the company from a monoline credit card issuer into a diversified financial services firm with a significant presence in retail banking, commercial lending and digital banking the past year, shares of Capital One have rallied 40.3%, outperforming the industry's growth of 39%. Image Source: Zacks Investment Research At present, COF carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Mastercard Incorporated (MA) : Free Stock Analysis Report Visa Inc. (V) : Free Stock Analysis Report Capital One Financial Corporation (COF) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Sign in to access your portfolio
Yahoo
19-05-2025
- Business
- Yahoo
Capital One just bought Discover. Here's what it means for their customers.
On Sunday, Capital One acquired Discover Financial, becoming the sixth-largest US bank by assets. Online-focused Discover stands to gain a big physical footprint from the deal. A pair of top Democrats warned last month that the deal could spell trouble for customers. Capital One has acquired Discover Financial, becoming the sixth-largest bank in the US by asset size. In an earnings call last month, Capital One's CEO, Richard Fairbank, said the goal was to "preserve the best" of what Discover does, such as its advertising and focus on customer experiences. Capital One's $35.3 billion acquisition of Discover was first announced in February 2024. The deal was approved by regulators last month, despite pushback from top Democrats and consumer advocates who raised concerns about lower competition and risks to low-income customers and those with poor credit scores. Representatives of Capital One and Discover didn't respond to a request for comment. On Monday, both banks said that "customer accounts and banking relationships remain unchanged" at this time. Here's what customers of each of the two companies stand to gain and lose from the deal. A much bigger Capital One could mean more products, but some Democrats have warned of higher fees. Capital One previously said the merger would increase competition with the transaction giants Visa, Mastercard, and American Express and improve access for lower-income customers. In a white paper published in July, four economists and lawyers at the International Center for Law & Economics wrote that the merger might finally end the Visa and MasterCard "duopoly." They added that the merger would let Capital One switch its debit cards to Discover's payment networks, and it might offer "more attractive products to depositors." This could include free checking accounts with no minimum balance rules and debit cards with cash back for lower-income customers. Cost savings and other benefits from the acquisition could also make Capital One a stronger competitor to "behemoths such as JPMorgan Chase, Citibank, and Bank of America," the ICLE group wrote. The merger doesn't appear to mean any big immediate changes. Discover has said accounts aren't linked to the new corporate owner, so Capital One branches and customer service can't help with Discover products. Eventually, Discover customers may have greater access to the bank through Capital One's branches and ATMs. Right now, Discover has just one physical outpost in Delaware. Michael Shepherd, the interim CEO of Discover, said on an earnings call last month that the deal would "increase competition in payment networks" and "offer a wider range of products." In a letter written to the Federal Reserve System earlier this month, Rep. Maxine Waters of California and Sen. Elizabeth Warren of Massachusetts argued that the merger would hurt Capital One customers. Warren and Waters are top Democrats on the Senate Banking, Housing, and Urban Affairs Committee and the House Financial Services Committee, respectively. "These are not two traditional banks — they are credit card giants," they wrote. Waters and Warren said post-merger Capital One would have 40% of the general-purpose credit card issuance market share. This would give Capital One the power to increase fees for merchants and reduce rewards and other benefits for customers. "Merchants would have no choice but to accept the terms dictated by Capital One's network, since they need to access the customers of the largest credit card issuer in the country," they wrote in the letter. Warren and Waters said it was "doubtful" that Capital One could fix the "myriad issues" that Discover faces. "For roughly 17 years, Discover misclassified millions of consumer credit cards as commercial, resulting in higher interchange fees for transactions," the politicians wrote. In the white paper, the ICLE economists and lawyers wrote that a merger could improve data protection because the combined company would have the capacity to increase "financial investments in security." A bigger company also means access to more data, which can be a plus, they wrote. "The ability to capture and analyze more data on more customers may also permit the larger and more competitive company to develop and offer new innovative products," the ICLE experts wrote. Read the original article on Business Insider
Yahoo
19-05-2025
- Business
- Yahoo
Capital One just bought Discover. Here's what it means for their customers.
On Sunday, Capital One acquired Discover Financial, becoming the sixth-largest US bank by assets. Online-focused Discover stands to gain a big physical footprint from the deal. A pair of top Democrats warned last month that the deal could spell trouble for customers. Capital One has acquired Discover Financial, becoming the sixth-largest bank in the US by asset size. In an earnings call last month, Capital One's CEO, Richard Fairbank, said the goal was to "preserve the best" of what Discover does, such as its advertising and focus on customer experiences. Capital One's $35.3 billion acquisition of Discover was first announced in February 2024. The deal was approved by regulators last month, despite pushback from top Democrats and consumer advocates who raised concerns about lower competition and risks to low-income customers and those with poor credit scores. Representatives of Capital One and Discover didn't respond to a request for comment. On Monday, both banks said that "customer accounts and banking relationships remain unchanged" at this time. Here's what customers of each of the two companies stand to gain and lose from the deal. A much bigger Capital One could mean more products, but some Democrats have warned of higher fees. Capital One previously said the merger would increase competition with the transaction giants Visa, Mastercard, and American Express and improve access for lower-income customers. In a white paper published in July, four economists and lawyers at the International Center for Law & Economics wrote that the merger might finally end the Visa and MasterCard "duopoly." They added that the merger would let Capital One switch its debit cards to Discover's payment networks, and it might offer "more attractive products to depositors." This could include free checking accounts with no minimum balance rules and debit cards with cash back for lower-income customers. Cost savings and other benefits from the acquisition could also make Capital One a stronger competitor to "behemoths such as JPMorgan Chase, Citibank, and Bank of America," the ICLE group wrote. The merger doesn't appear to mean any big immediate changes. Discover has said accounts aren't linked to the new corporate owner, so Capital One branches and customer service can't help with Discover products. Eventually, Discover customers may have greater access to the bank through Capital One's branches and ATMs. Right now, Discover has just one physical outpost in Delaware. Michael Shepherd, the interim CEO of Discover, said on an earnings call last month that the deal would "increase competition in payment networks" and "offer a wider range of products." In a letter written to the Federal Reserve System earlier this month, Rep. Maxine Waters of California and Sen. Elizabeth Warren of Massachusetts argued that the merger would hurt Capital One customers. Warren and Waters are top Democrats on the Senate Banking, Housing, and Urban Affairs Committee and the House Financial Services Committee, respectively. "These are not two traditional banks — they are credit card giants," they wrote. Waters and Warren said post-merger Capital One would have 40% of the general-purpose credit card issuance market share. This would give Capital One the power to increase fees for merchants and reduce rewards and other benefits for customers. "Merchants would have no choice but to accept the terms dictated by Capital One's network, since they need to access the customers of the largest credit card issuer in the country," they wrote in the letter. Warren and Waters said it was "doubtful" that Capital One could fix the "myriad issues" that Discover faces. "For roughly 17 years, Discover misclassified millions of consumer credit cards as commercial, resulting in higher interchange fees for transactions," the politicians wrote. In the white paper, the ICLE economists and lawyers wrote that a merger could improve data protection because the combined company would have the capacity to increase "financial investments in security." A bigger company also means access to more data, which can be a plus, they wrote. "The ability to capture and analyze more data on more customers may also permit the larger and more competitive company to develop and offer new innovative products," the ICLE experts wrote. Read the original article on Business Insider
Yahoo
19-05-2025
- Business
- Yahoo
Capital One closes $35.3bn acquisition of Discover Financial Services
Capital One Financial has concluded the $35.3bn acquisition of US-based Discover Financial Services. The acquisition received necessary approvals from regulatory bodies, including the board of Governors of the Federal Reserve System and the Office of the Comptroller of the Currency in April this year, and the Delaware State Bank Commissioner in December 2024. Shareholders from both Capital One and Discover voted in favour of the acquisition in February 2025. As part of the acquisition, Capital One has increased its board of directors from 12 to 15 members, appointing Thomas Maheras, Michael Shepherd, and Jennifer Wong, who were previously on Discover's board, to the new positions. Currently, customer accounts and banking relationships for both Capital One and Discover will remain unchanged. Capital One plans to maintain the Discover credit card products under the Discover brand, alongside its existing range of consumer cards. The acquisition will also integrate the Discover, PULSE, and Diners Club International networks into Capital One's offerings. Capital One founder and CEO Richard Fairbank said: 'This deal brings together two innovative, mission-driven companies that together are poised to deliver breakthrough products and experiences to consumers, businesses, and merchants.' Legal advisory services for Capital One were provided by Wachtell, Lipton, Rosen & Katz, with Cleary Gottlieb acting as co-antitrust legal advisor and Centerview Partners serving as financial advisor. Discover was advised by Sullivan & Cromwell, with financial advisory support from PJT Partners and Morgan Stanley. Capital One Financial and offers a range of financial products and services to consumers, small businesses, and commercial clients through various channels. As of 30 March 2025, the company and its subsidiaries reported $367.5bn in deposits and total assets amounting to $493.6bn. "Capital One closes $35.3bn acquisition of Discover Financial Services" was originally created and published by Retail Banker International, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Business Wire
18-05-2025
- Business
- Business Wire
Capital One Completes Acquisition of Discover
MCLEAN, Va.--(BUSINESS WIRE)--Capital One Financial Corporation (NYSE: COF) today announced that it has completed its acquisition of Discover Financial Services. 'This deal brings together two innovative, mission-driven companies that together are poised to deliver breakthrough products and experiences to consumers, businesses, and merchants,' said Richard D. Fairbank, Founder and CEO of Capital One. 'I am particularly grateful for the leadership and partnership of Discover's Board of Directors, its Executive Management Committee, and interim CEO Michael Shepherd. Their advocacy for Discover and its customers, and our shared commitment to a successful closing were instrumental in achieving today's milestone. Through the efforts of thousands of associates across Capital One and Discover, we are well-positioned to continue our quest to change banking for good for millions of customers,' added Fairbank. Capital One announced on February 19, 2024, that it had entered into a definitive agreement to acquire Discover. The acquisition was approved by the Board of Governors of the Federal Reserve System and the Office of the Comptroller of the Currency on April 18, 2025, and by the Delaware State Bank Commissioner on December 18, 2024. Stockholders of Capital One and Discover voted in favor of the deal on February 18, 2025. In connection with the acquisition, Capital One expanded its Board of Directors from 12 to 15 and appointed Thomas G. Maheras, Michael Shepherd, and Jennifer L. Wong, each a member of Discover's former Board of Directors, to serve on the Capital One Board of Directors. At this time, Capital One and Discover customer accounts and banking relationships remain unchanged. Customers will be provided with comprehensive information in advance of any forthcoming changes. Until then, customers do not need to take any action and will continue to be served through their respective Capital One and Discover customer tools and channels. Capital One intends to continue to offer Discover credit card products as Discover-branded cards alongside the other consumer cards currently offered by Capital One. The Discover®, PULSE®, and Diners Club International® networks will join our suite of offerings. Investing in our Communities Capital One is committed to investing in our local communities and expanding economic and financial opportunity. Implementation of Capital One's historic, $265 billion Community Benefits Plan, developed in connection with the acquisition and in partnership with leading community organizations, will also now begin, mobilizing funding and support to advance lending, investment, and services to strengthen economic opportunity and financial well-being across America. Advisors Wachtell, Lipton, Rosen & Katz served as legal advisor, Cleary Gottlieb served as co-antitrust legal advisor, and Centerview Partners LLC served as financial advisor to Capital One. Sullivan & Cromwell LLP served as legal advisor and PJT Partners and Morgan Stanley & Co. LLC served as financial advisors to Discover. Further information on Capital One's acquisition of Discover can be found at About Capital One Capital One Financial Corporation ( is a financial holding company which, along with its subsidiaries, had $367.5 billion in deposits and $493.6 billion in total assets as of March 31, 2025. Headquartered in McLean, Virginia, Capital One offers a broad spectrum of financial products and services to consumers, small businesses and commercial clients through a variety of channels. Capital One, N.A. has branches and Cafés located primarily in New York, Louisiana, Texas, Maryland, Virginia and the District of Columbia. A Fortune 500 company, Capital One trades on the New York Stock Exchange under the symbol 'COF' and is included in the S&P 100 index. Additional information about Capital One can be found at Capital One About at Forward-Looking Statements Information in this communication, other than statements of historical facts, may constitute forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may include, but are not limited to, statements related to the expected benefits of the transaction. Forward-looking statements may be identified by terminology such as 'may,' 'will,' 'should,' 'targets,' 'scheduled,' 'plans,' 'intends,' 'goal,' 'anticipates,' 'expects,' 'believes,' 'forecasts,' 'outlook,' 'estimates,' 'potential,' or 'continue' or negatives of such terms or other comparable terminology. All forward-looking statements are subject to risks, uncertainties and other factors that may cause the actual results, performance or achievements of Capital One to differ materially from any results expressed or implied by such forward-looking statements. Such factors include, among others, risks relating to the transaction, including the risk that the cost savings and any revenue synergies and other anticipated benefits from the transaction may not be fully realized or may take longer than anticipated to be realized, and the risk that the integration of Discover's business and operations into Capital One will be materially delayed or will be more costly or difficult than expected. Additional factors that could affect future results of Capital One can be found in Capital One's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, in each case filed with the SEC and available on the SEC's website at Capital One disclaims any obligation and do not intend to update or revise any forward-looking statements contained in this communication, which speak only as of the date hereof, whether as a result of new information, future events or otherwise, except as required by federal securities laws.
