A major US consumer finance watchdog is skeptical of large-scale mergers between credit card companies.
Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra expressed these concerns on Wednesday (April 24). interview In an interview with the Financial Times (FT), capital one Working towards completion of $35 billion acquisition Discover.
“We need to carefully scrutinize what the impact would be if we merged two very large financial institutions and they went bankrupt,” Chopra said. The company declined to comment specifically on the transaction, the report said.
“When we talk about mergers of large companies like this, we need to consider not only the competitive effects, but also the impact on financial stability.”
In February, Capital One announced plans to acquire Discover in a proposed transaction that would create a global payments platform with 70 million merchant acceptance points in more than 200 countries and territories.
The partnership creates the nation’s largest credit card issuer by outstanding balances and sixth-largest bank by assets, and Capital One joins Discover Credit Card, the fourth-largest network behind Visa, MasterCard, and American Express. He will be in charge of the card payment network.
Last month, Reuters reported, citing people familiar with Capital One’s regulatory filings, that the company argued that the Discover deal would increase competition.
The filing also argues that the deal will not hurt competition in the credit card market, as the combined company will account for 13% of credit card purchases, and Capital One said this will states that it is the best measure of market share.
Although the CFPB cannot block the transaction, Chopra told the FT that the agency is “regularly consulted on merger issues.”
Although he did not mention the two companies by name, he did say he was concerned about the merger of two “major issuers.” . . It competes in many credit card submarkets and calls this a “very significant deal.”
PYMNTS discussed the regulatory challenges facing the merger in a February interview. jim mccarthyCEO of thread.
McCarthy said the deal “is going to be a very long journey” and that “Capital One has some difficult decisions to make about what it wants to do with this mix of assets.”
