Capital One has committed to providing $265 billion in lending, investment, and philanthropy over the next five years if its acquisition of Discover Financial Services is approved.
The financial services giants announced their $35.3 billion merger agreement in February. If the deal goes through, it would result in the largest credit card company in the U.S. by loan volume and the sixth-largest bank by assets. The acquisition would also give Capital One control over and access to revenue generated by Discover’s payment network with 70 million merchant acceptance points globally.
Such a significant acquisition is expected to face intense regulatory scrutiny in the U.S., with concerns about its impact on competition in the banking, credit card, and payments sectors. However, Capital One hopes that its substantial community-focused financial commitment, announced on Wednesday, will encourage regulators to view the Discover deal more favorably.
“We have a long history of developing innovative ways to serve these core constituencies, and we are committed to ensuring, through this community benefits plan, that our acquisition of Discover builds on our history of positive impact,” Capital One chief Richard Fairbank stated.
The Federal Reserve and the Office of the Comptroller of the Currency, the two agencies responsible for examining the deal, will hold a public meeting to discuss the proposed acquisition on Friday.
Capital One’s $265 billion pledge is more than twice as large as any previous community commitment linked to a bank acquisition. This figure includes $200 billion in consumer lending to low- and moderate-income individuals and communities, $44 billion in community development financing, $15 billion in small business loans, $5 billion in spending with diverse suppliers, $600 million in support for community development financial institutions, and $575 million in philanthropy.
However, some community groups have raised concerns about the plan. National Community Reinvestment Coalition CEO Jesse Van Tol criticized the plan, describing the process as “deeply flawed.”
“The large numbers in Capital One’s press release appear designed to dazzle, but these things rise and fall based on the details of implementation and accountability,” Van Tol said, characterizing the bank as “cynical, manipulative, and dishonest.”