Discover Financial jumps 7% after agreeing with FDIC to improve consumer compliance

(Reuters) – Shares of Discover Financial Services climbed 7% on Monday after the bank agreed to improve its consumer compliance and related corporate governance as part of a consent order with the Federal Deposit Insurance Corp (FDIC).

The stock was the top percentage gainer on the benchmark S&P 500 in early trading, outperforming both the broader markets and the financial sector.

“Discover Bank has been taking significant steps to strengthen the organization’s compliance management system and address the other issues identified in the consent order,” the lender said in a filing with the U.S. Securities and Exchange Commission on Friday.

In late July, Discover revealed it had received a proposed consent order from the FDIC in connection with consumer compliance.

At the time, the bank’s shares tanked after it also disclosed a regulatory review over some incorrectly classified credit card accounts from around mid-2007 unrelated to the FDIC consent order.

The company then decided to pause share repurchases as well.

As the regulatory review on the misclassification is ongoing, additional enforcement actions or other supervisory activity from the FDIC and other regulators remain possible, Discover said in filing on Friday.

(Reporting by Manya Saini in Bengaluru; Editing by Sriraj Kalluvila)