Capital One waiting for regulatory approval of Discover acquisition

As
it
waits
for
regulators
to
approve
its
$35
billion
acquisition
of
payments
network


Discover,


Capital
One

is
“fully
mobilized
to
plan
and
deliver
a
successful
integration.” 

Adding
Discover
will
make
the
$475
billion
bank
a
more
“diversified,
vertically-integrated
global
payments
platform,”
and
Discover’s
payment
volume
generated
from
its
100
million
customers
will
scale
Capital
One
operations
and
reach,
Chief
Executive
Richard
Fairbank
said
during
Capital
One’s
first-quarter
earnings
call
on
April
25.

All
applications
for
regulatory
approval
have
been
filed,
Fairbank
added. 

In
the
first
quarter,
Discover
reported
payment
volume
of
$51.8
billion,
flat
year
over
year,
on
its
Discover
Network.

 

“The
Capital
One
team
is
leading
the
integration
planning
process,”


Michael


Shepherd,
chief
executive
of
Discover,
said
during
the
company’s
earnings
call
on
April
18.
“The
process
has
achieved
the
first
important
milestone,
the
submission
of
the
merger
applications
to
the


Federal
Reserve

and
the
[Office
of
the
Comptroller
of
the
Currency].” 

Capital
One
will
“leverage
and
scale
the
benefits
of
our
11-year
technology
transformation
across
every
business
and
the
network,
which
will
serve
as
a
catalyst
for
innovation
and
enhanced
capabilities
in
risk
management
and
compliance,
underwriting,
marketing
and
customer
service,”
Fairbank
said
on
the
April
25
call. 

The
merger’s

tech
cost
is
expected
to
be
$2.8
billion,
according
to


Bank
Automation
News’
prior
reporting. 

THE
BIG
PICTURE:
Many
financial
institutions
are
preparing
for
a
wave
of
mergers
and
acquisitions
in
2024.

 

Morgan


Stanley

is
deploying
technological
tools
to
aid
M&A
activities
while



Goldman


Sachs

is
eyeing
increased
revenue
from
a
potential
increase
in
M&A
activities. 

BY
THE
NUMBERS:
In
Q1,
Capital
One
reported; 

• 
  Net
  revenues
  of
  $9.4
  billion,
  down
  1%
  YoY; 
• 
  Employees
  of
  51,300,
  down
  9%
  YoY; 
• 
  Net
  interest
  income
  of
  $7.4
  billion,
  up
  4%
  YoY;
  and 
• 
  Net
  income
  of
  $1.2
  billion,
  up
  33%
  YoY. 

OF
NOTE:
The
Federal
Reserve
has
extended
the
public
comment
period
on
the
acquisition
of
Discover
until
May
31.
The
initial
deadline
was
today.

 

Of
six
public
comments
posted
on
the
Fed’s
website,
five
are
opposed
to
the
merger
to
avoid
consolidation
of
financial
services
in
the
industry. 

NOTEWORTHY:
Its
technology
and
digital-first
banking
capabilities
are
driving
Capital
One
deposits,
Fairbank
said.

 

In
Q1,
Capital
One
reported
total
deposits
of
$2.8
billion,
up
52%
YoY,
according
to
the
bank’s
earnings
report. 

.