Capital One has committed to lending, investment, and philanthropy totaling $265 billion over the next five years if its acquisition of Discover Financial Services is approved.
The merger, announced in February, is valued at $35.3 billion and would make Capital One the largest credit card company in the U.S. by loan volume and the sixth-largest bank by assets. The deal would also allow Capital One to control and benefit from Discover’s payment network of 70 million merchant acceptance points worldwide.
This significant merger is expected to undergo rigorous regulatory scrutiny in the U.S., with concerns about its impact on competition within the banking, credit card, and payments industries. However, Capital One hopes that its noteworthy community financial commitment will help sway regulators in favor of the acquisition.
“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,” said Capital One chief Richard Fairbank.
The Federal Reserve and the Office of the Comptroller of the Currency, responsible for examining the deal, will hold a public meeting to discuss the proposed acquisition on Friday.
Capital One’s $265 billion pledge, which is more than double any previous community commitment linked to a bank acquisition, includes $200 billion in consumer lending to low- and moderate-income consumers and communities, $44 billion in community development financing, $15 billion in small business lending, $5 billion in spending with diverse suppliers, $600 million in support for community development financial institutions, and $575 million in philanthropy.
However, some community organizations have criticized the plan. Jesse Van Tol, CEO of the National Community Reinvestment Coalition, described the plan as having been developed through a “deeply flawed process,” and accused the bank of being “cynical, manipulative and dishonest.”
Conversely, Horacio Mendez, President and CEO of Woodstock Institute, one of the organizations that collaborated with Capital One, praised the commitment. He stated that while not everyone received everything they wanted, the plan represents substantive change and progress on important issues. “Specific to Woodstock’s mission, Capital One’s commitment to fair and responsible lending, and to collaborate on advocacy issues and policies that reflect our common interests, creates a new and powerful alliance that can effectively advance systemic solutions for those most in need,” Mendez said.