The merger, announced last year, would mark the establishment of the largest U.S. credit card company by balances if it goes through successfully.

U.S. banking regulators said on Friday they approved Capital One's $35.3 billion purchase of Discover Financial Services , paving the way for the combined firms to become the nation's eighth-largest bank.

The all-stock deal, first announced over a year ago, would give Capital One a major leg up against competing credit card-issuing banks such as JPMorgan Chase ( JPM ), Bank of America ( BAC) and Citigroup ( C ), which don’t process transactions themselves.