By Jonathan Stempel
New York Attorney General Letitia James is currently conducting an investigation to determine whether Capital One’s proposed acquisition of Discover Financial Services for $35.3 billion violates the state’s antitrust laws.
In court filings submitted on Wednesday, James requested a subpoena for Capital One to obtain necessary documents for her investigation, citing the bank’s alleged lack of cooperation.
James emphasized that the potential merger could have a significant impact in New York, as Capital One and Discover collectively hold more than $16 billion in credit card loans in the state.
She also highlighted that vulnerable New Yorkers with subprime credit scores could be particularly affected by the merger.
Capital One, headquartered in McLean, Virginia, is a major U.S. bank with assets totaling $480 billion as of June 30. The bank is set to announce its third-quarter results on Thursday.
Discover, based in Riverwoods, Illinois, reported a third-quarter profit of $965 million last week.
Capital One stated that it would respond to James through appropriate legal channels and expressed confidence in obtaining approval for the merger from federal banking regulators.
Discover did not immediately provide a comment on the matter.
The proposed all-stock merger, announced in February, aims to create the largest U.S. credit card issuer with access to over 305 million cardholders.
James noted that the merger would solidify Capital One’s position as the leading U.S. subprime card issuer with a market share exceeding 30%.
The merger would also enable Capital One to expand its payment operations by issuing Visa- and Mastercard-branded cards.
Approval from shareholders, the Department of Justice, and the Federal Trade Commission is required for the merger to proceed. Capital One and Discover anticipate closing the deal by early 2025.
In May, James requested Capital One and Discover to waive confidentiality so her office could review documents submitted to the Justice Department’s antitrust division. While Discover agreed to a full waiver, Capital One refused, citing concerns over New York gaining unlawful authority over national banks.
Additionally, customers have filed lawsuits against Capital One and Discover, alleging that the merger would diminish competition and increase consumer costs.