Capital One's Acquisition of Discover to Change Competitive Dynamics of U.S. Credit Card Industry

This commentary covers Capital One Financial Corporation’s announcement to acquire Discover Financial Services and the implications for the U.S. credit card industry.

Key highlights include:

-- The proposed acquisition includes the Discover payment network, the fourth largest payment network in the U.S., which could be a positive for Capital One's card issuing business.
-- Discover's credit card portfolio credit quality profile as measured by FICO score is stronger relative to Capital One's.
-- The incorporation of Discover's online deposit franchise could further bolster Capital One's online deposit base and franchise.

“The combined credit card portfolio from the acquisition will position Capital One as the top credit card issuer in the U.S. making it an even more formidable player in credit card issuing space.” said Yanni Koulouriotis, CFA, Vice President - Global FIG