BNP Paribas sells Bank of the West to Canadian BMO for $ 16 billion

A BNP Paribas logo is seen outside a bank office in Paris, France, August 6, 2018. REUTERS / Regis Duvignau / File Photo

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  • Sales unit for $ 16.3 billion
  • Provides BMO with more than 500 branches and offices in the United States
  • BNP Paribas will use the proceeds for more share buybacks
  • BNP Paribas to clarify its strategic plans early next year

PARIS, December 20 (Reuters) – BNP Paribas (BNPP.PA), France’s largest bank by market capitalization, has announced that it has agreed to sell its US unit Bank of the West to Canadian financial group BMO for around $ 16.3 billion. dollars.

BNP Paribas is struggling to keep up with its larger competitors in the US retail banking market, while the sale will also strengthen BMO’s presence in the US.

The sale will leave BNP Paribas to focus directly on Europe, where it is growing as one of the region’s largest investment banks as its local competitors stagnate. Over the past two years, she has taken over blue chip private equity and brokerage businesses from Deutsche Bank (DBKGn.DE) and Credit Suisse (CSGN.S).

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“This is an accretive transaction for all parties, which underlines the quality of the Bank of the West franchise,” BNP Paribas CEO Jean-Laurent Bonnafe said on Monday.

BNP Paribas stock rose at the start of trading, but fell back to 0.7% by 9:00 a.m. GMT as global stock markets were hit by COVID-19 fears, although analysts hailed the deal of sale. .

The bank said it would use the proceeds from the sale to fund more share buybacks and to fund targeted acquisitions and further develop its presence in Europe.

It said it would consolidate and further develop its business in the United States, and that the liquidity from the sale could give BNP Paribas more strategic flexibility than other European banks.

The bank said it would clarify its main strategic plans in February and March of next year.

“It makes sense. Bank of the West was not that strategic for them. They were never going to be a big retail bank in the US, and they can focus more on their European investment bank, where they make more profit, ”said Clairinvest, fund manager Ion-Marc Valahu, who owns BNP Paribas shares.

Analysts at Credit Suisse and Keefe, Bruyette & Woods (KBW) also said the sale price of $ 16 billion was higher than many analysts had expected.

“Achieving this award for Bancwest is clearly positive for shareholders and gives BNPP some strategic option, which is a rare thing for European banks,” KBW wrote.

The United States has proven to be an increasingly less attractive market for European lenders, with BBVA selling its US business to PNC in 2020 and HSBC earlier this year selling most of its US business to citizens.

BNP Paribas bought Bank of the West in 1979 and the unit had been its largest business outside of Europe.

BMO said the acquisition would attract nearly 1.8 million customers and expand its banking presence through 514 additional branches and commercial and wealth management offices in key growth markets in the United States.

BMO said the Bank of the West, founded in 1874, would also give the Canadian company about $ 56 billion in loans and $ 89 billion in deposits.

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Reporting by Sudip Kar-Gupta; edited by Jane Merriman and Jason Neely

Our standards: Thomson Reuters Trust Principles.

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