Capital One considers acquisition of Discover Financial, Bloomberg says

By Thomson Reuters Feb 19, 2024 | 10:58 AM

(Reuters) – Capital One, an online consumer bank and credit card issuer backed by investor Warren Buffett, is considering a potential acquisition of credit card lender Discover Financial Services, Bloomberg News reported, citing people familiar with the matter.

Capital One has been working with advisers to “study a deal” for Discover, the report said. It added that deliberations were ongoing, and there was no certainty they would lead to a deal.

Discover and Capital One did not immediately respond to requests for comment.

In late 2023, Discover, said it was exploring the sale of its student loan business and would stop accepting new student loan applications in February.

The company in July disclosed a regulatory review over some incorrectly classified credit card accounts from mid-2007. CEO Roger Hochschild left in August.

In October, Discover said it agreed to improve its consumer compliance and related corporate governance as part of a consent order with the Federal Deposit Insurance Corp (FDIC).

In January, Discover and Capital One reported 62% and 43% falls in fourth-quarter profit, respectively, as banks increased provisions for losses from bad loans as rising interest rates raised the risk of consumer defaults on credit card debt and mortgages.

(Reporting by Juveria Tabassum; Editing by Cynthia Osterman)