Capital One launches community benefits plan

As part of its potential acquisition of Discover Financial Services, Capital One, a financial holding company, introduced a community benefits plan that reserves approximately USD 265 billion for several use case over five years. Developed in collaboration with the National Association for Latino Community Asset Builders, NeighborWorks America, the Opportunity Finance Network, and the Woodstock Institute, the plan aims to allow increased lending, investment, and services to underserved communities that the institutions would typically commence on a stand-alone basis.

In addition, the commitments are set to increase economic opportunity for underserved consumers, such as those in low- and moderate-income (LMI) neighbourhoods, rural areas, and communities of colour. Also, the plan is set to deliver access to optimised products and services for unbanked and underbanked individuals and those across the credit spectrum, enabling them to receive capital. Besides the negotiation process led by the four-community group, Capital One’s plan was informed by engagement with the firm’s Community Advisory Council, over 100 community organisations nationwide, and nearly 100 local, state, and federal elected officials.

As detailed by Capital One, the plan is developed to increase access to safe and affordable housing, provide credit so that small business owners can sustain and expand their operations, deliver credit for LMI consumers, and design local infrastructure that can facilitate the provision of essential services. Also, the company intends to assist the development of schools, civic centres, and healthcare facilities that represent an essential factor in creating strong communities.

Moreover, the five-year plan integrates financial and programmatic commitments across community development, Community Development Financial Institutions (CDFIs), philanthropy and pro bono, consumer card and auto lending, small business and supplier diversity, and bank access.

Back in February 2024, Capital One announced that it acquired Discover Financial in an all-stock transaction valued at USD 35.3 billion. At that time, the transaction was projected to close by the end of 2024 or at the beginning of 2025, subject to satisfaction of customary closing conditions, such as regulatory approvals and agreement from the shareholders of each firm. Capital One mentions that the community benefits plan depends on the closing of the Discover Financial acquisition.

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