Canada-based BMO Financial Group has agreed to acquire Bank of the West, the US subsidiary of French banking firm BNP Paribas, for $16.3bn.
The transaction consideration represents 1.72 times the Bank of the West’s Tangible Book Value and 20.5% of its market capitalisation, said BNP Paribas.
The acquisition has been approved by the boards of directors of both companies.
It is expected to complete through 2022, subject to customary closing conditions, including relevant antitrust and regulatory authorities’ approval.
Upon closing of the deal, BMO Financial Group intends to merge the Bank of the West into its US subsidiary BMO Harris Bank.
With the acquisition, BMO Financial Group will have a footprint in 32 states, expanded national speciality commercial businesses and a digital banking platform with deposits in the US.
Also, the Canadian lender is enabled to expand its digital, data and analytics capabilities, along with commercial banking services, and start its operations in California.
In addition to the acquisition, BMO will sign a long-term distribution agreement to provide Equipment Finance and Cash Management solutions to BNP Paribas’ customers.
BMO Financial Group CEO Darryl White said: “With the strength of our performance and our integrated North American foundation, we have never been better positioned to take this next step in our growth strategy and to deliver for the new customers and colleagues we look forward to welcoming to BMO.
“This acquisition will add meaningful scale, expansion in attractive markets, and capabilities that will enable us to drive greater growth, returns and efficiencies.”
Established in 1874, Bank of the West is engaged in providing retail and commercial banking services to retail, small business, commercial and wealth clients in the US.
It serves nearly 1.8 million customers through its more than 500 branches and offices in 24 Western and Midwestern states and a team of more than 9,000 employees.
BMO intends to fund the transaction through its surplus capital on the balance sheet, based on its strong capital position and anticipated capital generation.
BNP Paribas said that the transaction will generate a capital gain of around €2.9bn and a positive impact on the Group’s Common Equity Tier 1 (CET1) ratio by around 170 basis points.
BNP Paribas Group director and CEO Jean-Laurent Bonnafé said: “This is a value accretive transaction for all sides, which emphasizes the quality of Bank of the West franchise.
“In the name of BNP Paribas, I would like to deeply thank all Bank of the West teams for their achievements and contributions for the development of the Bank.
“Moreover, BNP Paribas’ set-up in the United States remains a strategic pillar for the development of our Corporate and Institutional franchise. With this transaction, BNP Paribas also reaffirms its commitment to deliver value to all its stakeholders.”
