Discover will participate in Capital Purchase Program to become a bank

On January 14, 2009, Discover Financial Services received preliminary approval from the U.S. Department of the Treasury to participate in the U.S. Treasury's Capital Purchase Program subject to standard closing conditions. The Company expects to issue and sell to the U.S. Treasury shares of preferred stock and warrants to purchase shares of common stock of the Company in accordance with the terms of the Program for an aggregate purchase price of approximately $1.2 billion. 

In connection with participating in the Program, the Discover intends to become a bank holding company under the Bank Holding Company Act of 1956 and a financial holding company under the Gramm-Leach-Bliley Act. As previously announced, the Company's application to become a bank holding company was approved by the U.S. Federal Reserve on December 19, 2008. Management believes that the existing capital levels of the Company satisfy the Federal Reserve definition of a "well-capitalized" bank holding company. Receipt of funds under the U.S. Treasury's Capital Purchase Program would enhance existing capital levels.

Source:  Discover Financial Services