By Jonathan Stempel
NEW YORK (Reuters) – New York Lawyer Common Letitia James is investigating whether or not Capital One’s proposed $35.3 billion takeover of Uncover Monetary Providers (NYSE:) violates the state’s antitrust legislation.
James requested a state choose in Manhattan in court docket filings on Wednesday to subpoena Capital One for paperwork wanted for her probe, citing the financial institution’s alleged lack of cooperation.
James mentioned a merger may have a big affect in New York as a result of Capital One and Uncover respectively have greater than $9.5 billion and $6.5 billion of bank card loans there.
She additionally mentioned the affect of a merger could be “significantly felt by the usually susceptible New Yorkers with subprime credit score scores.”
Capital One, based mostly in McLean, Virginia, is without doubt one of the largest U.S. banks, with $480 billion of property as of June 30. It expects to report third-quarter outcomes on Thursday.
Uncover, based mostly in Riverwoods, Illinois, reported a $965 million third-quarter revenue final week.
Capital One mentioned in a press release that it could reply to James by means of acceptable authorized channels, and was “nicely positioned” to win merger approval from federal banking regulators.
“We’ve got made a robust case on the pro-competitive and pro-consumer advantages of this transaction,” it mentioned.
Uncover didn’t instantly reply to requests for remark.
The all-stock merger, introduced in February, would create the biggest U.S. bank card issuer with greater than $250 billion of excellent loans, surpassing JPMorgan Chase (NYSE:), and entry to greater than 305 million cardholders.
James mentioned the merger would prolong Capital One’s lead as the biggest U.S. subprime card issuer, and provides the mixed firm a market share of greater than 30%.
A merger would additionally assist Capital One, which points Visa- and Mastercard-branded playing cards, increase its cost operations.
The merger additionally requires approval by shareholders, the Federal Reserve and the Workplace of the Comptroller of the Forex. Capital One and Uncover have mentioned they hope to shut by early 2025.
James mentioned her workplace requested Capital One and Uncover in Might to waive confidentiality so it may evaluate paperwork they submitted to the Justice Division’s antitrust division.
Uncover agreed to a full waiver however Capital One didn’t, claiming it could give New York illegal “visitorial energy” over nationwide banks, resulting in the subpoena, James mentioned.
Clients have additionally sued Capital One and Uncover, saying the merger would scale back competitors and increase client prices.
