By George Glover

Shares of Capital One and Discover Financial Services were rising Monday, as investors reacted to U.S. banking regulators approving a $35 billion merger between two of the biggest U.S. credit-card issuers. The approval could provide a boost to bank stocks if it is a sign that the Trump administration will be more open to mergers.

Capital One stock had climbed 4% and Discover shares were up 6.2% in premarket trading. Futures tracking the S&P 500 slipped 1.1% as investors fretted about trade tensions and President Donald Trump's attacks on the Federal Reserve.

The Office of the Comptroller of the Currency and the Federal Reserve Board, which oversee U.S. lenders, said Friday that they had approved the deal, which will create the sixth-largest U.S. bank. It's the final regulatory hurdle the two companies needed to clear to close a merger that was first announced in February 2024.

The approval of the transaction could be a sign that it will be easier for financial services companies to get deals done under the Trump administration. The Federal Deposit Insurance Corp. proposed last month to scrap a Biden-era policy aiming to give greater scrutiny to big bank mergers.

"We view the deal approval as a key positive, not only for Capital One (given the substantial L/T earnings upside), but for the broader sector given an implied constructive stance on whole bank mergers by the Trump administration in comparison to the Biden regime," writes Evercore ISI analyst John Pancari. "Capital One announced the DFS deal in Feb 2024, which kicked off over a year of uncertainty re: likelihood of regulatory approval or if the transaction would pass antitrust scrutiny."

Better late than never.

Write to George Glover at george.glover@dowjones.com

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April 21, 2025 09:18 ET (13:18 GMT)

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