Capital One Financial Corp.

The stable outlook on Capital One reflects our expectation that it will successfully complete its acquisition of Discover despite possible execution challenges, and that it will mitigate its higher concentration to credit cards through conservative capital management and credit reserving policies over the next two years. We could lower the ratings if the execution of the Discover acquisition hurts Capital One's business or financial performance. We could also lower the rating if Capital One can't mitigate the risks associated with Discover's legacy compliance and governance issues. Additionally, we could lower the ratings if Capital One's asset quality deteriorates substantially more than we currently anticipate or if its risk appetite increases. We could also lower the ratings if the bank does

...S&P Global Ratings expects Capital One Financial Corp. (Capital One)'s acquisition of Discover, announced in February 2024, to close in 2025 subject to necessary regulatory approvals. In our view, the benefits of the acquisition to Capital One in market share, profit synergies, and payment processing capability will be roughly balanced against a higher concentration in credit cards and considerable execution risk. Post-acquisition, Capital One will likely become the largest credit card lender in the U.S.--the acquisition would increase its asset size by about 30%. We note that Discover's outstanding regulatory/compliance issues add incremental complexity to the merger process (see "Capital One Financial Corp. '###' Rating Affirmed On Announced Acquisition Of Discover Financial; Outlook Remains Stable," published Feb. 21, 2024, on RatingsDirect)....

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