Bloomberg reported that Canada's Bank of Montreal (BMO) has agreed to buy the U.S. unit of France's BNP Paribas Bank of the West for $16.3 billion. The transaction will be financed by cash from the excess capital network (www.bloomberg.com).
Bank of Montreal (BMO) is the fourth-largest bank in Canada by assets, and this deal will be the largest acquisition in BMO's history. It will allow the Canadian bank to expand its U.S. customer base by 1.8 million people. According to Bank of Montreal CEO Darryl White, the deal will add significant scale and capacity in an attractive market, allowing for more growth, profitability and efficiency, highlighting Bank of the West's strong network in California, which has a larger population and economy than Canada.
Bank of Montreal already has structural divisions in the U.S., in particular through the acquisition of Harris Bankcorp in the 1980s and the takeover ten years ago by Marshall & Ilsley.
Proceeds from the sale of Bank of the West BNP Paribas plans to spend €4 billion ($4.5 billion) on share buybacks to offset diluted earnings per share, as well as €7 billion ($7.9 billion) on organic growth, technology investments and acquisitions. As a result of the deal, BNP Paribas will have a net capital gain of 2.9 billion euros ($3.3 billion).
According to Bloomberg, this is not the first deal for the sale of the banking business in the U.S. by international groups. In particular, the agency notes that Spain's BBVA sold the U.S. business for $11.6 billion in 2020 and Japan's Mitsubishi UFJ sold it for $8 billion in 2021. At the same time, as noted by the agency, the consolidation of the banking sector in Europe is frozen, due to higher capital requirements, which prevent large cross-border transactions (www.bloomberg.com).