Capital One, an online consumer bank, is reportedly considering acquiring Discover Financial Services, a credit card lender. (Christopher Sadowski)
Capital One, an online consumer bank and credit card issuer, is reportedly considering acquiring Discover Financial Services, a credit card lender, according to a source familiar with the matter. The potential deal, whose terms remain undisclosed, could be announced as early as Tuesday.
Discover Financial Services has a market capitalization of $27.6 billion, while Capital One is valued at $52.2 billion, according to LSEG data. Bloomberg News was the first to report on the potential acquisition. Both Discover and Capital One have not yet responded to requests for comment.
The news of this potential acquisition comes shortly after Michael Rhodes, a veteran of TD Bank Group, took over as the new CEO of Discover Financial following the departure of Roger Hochschild in August. In late 2023, Discover announced it was exploring the sale of its student loan business and would stop accepting new student loan applications in February.
Additionally, in July, Discover disclosed a regulatory review over some incorrectly classified credit card accounts from mid-2007. In October, the company agreed to improve its consumer compliance and related corporate governance as part of a consent order with the Federal Deposit Insurance Corp.
In January, both Discover and Capital One reported significant declines in fourth-quarter profits, with Discover's profit falling by 62% and Capital One's by 43%. This was attributed to banks increasing provisions for losses from bad loans as rising interest rates raised the risk of consumer defaults on credit card debt and mortgages.
