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 two financial services giants announced their $35.3 billion merger agreement in February. If approved, the merger would create the largest credit card company in the U.S. by loan volume and the sixth-largest bank by assets. This deal also grants Capital One control over and access to Discover’s payment network, which includes 70 million merchant acceptance points globally.
Such a significant acquisition is expected to face stringent regulatory scrutiny in the U.S., given concerns about its impact on competition in banking, credit card, and payment sectors. However, Capital One is hoping that the substantial community-focused financial commitment announced on Wednesday will help gain regulatory approval.
“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 in a statement.
The Federal Reserve and the Office of the Comptroller of the Currency, the two agencies reviewing the deal, will hold a public meeting on Friday to discuss the proposed acquisition.
Capital One stated that the $265 billion pledge is more than double any previous community commitment related to a bank acquisition. The pledged amount includes $200 billion in consumer lending to low- and moderate-income consumers and communities, $44 billion in community development financing, $15 billion in lending to small businesses, $5 billion in anticipated spending with diverse suppliers, $600 million in support for community development financial institutions, and $575 million in philanthropy.
However, some community groups have expressed concerns about the plan. Jesse Van Tol, CEO of the National Community Reinvestment Coalition, criticized the plan as having been developed through a “deeply flawed process.”
“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, calling the bank “cynical, manipulative and dishonest.”