BNP Paribas Bank of the West

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BIDDING FIELD
Does BNP Paribas own Bank of the West?
When did BNP buy Bank of the West?
Which bank bought out Bank of the West?
Was Bank of the West sold?

JPMorgan and Goldman Sachs working with BNP - sources
Discussions still at early stage - sources
PNC, Canada's TD and BMO seen as potential suitors
Any deal would face U.S. regulatory challenges

LONDON, Nov 15 (Reuters) - BNP Paribas (BNPP.PA) is working with advisers to assess a sale of its U.S. arm Bank of the West as it seeks to retreat from the American retail banking market after struggling to compete with larger and better capitalised rivals, sources told Reuters.

The French lender, which overtook Britain's HSBC (HSBA.L) last year to become Europe's largest bank by assets, is looking to part ways with its San Francisco-based retail banking subsidiary in a deal that could value it at about $15 billion, three sources with knowledge of the matter said.

JPMorgan (JPM.N) and Goldman Sachs (GS.N) are preparing the business for a sale and have been working closely with BNP to gauge interest from prospective bidders, the sources said.

Discussions are still at an early stage and no deal is certain, they said.

Shares in BNP rose as much as 5.5% to 62.55 euros after the Reuters story and were 3.4% higher in early afternoon trading.

JPMorgan was first to secure a mandate from BNP during the summer, one of the sources said, having recently represented Spain's BBVA (BBVA.MC) in the $11.6 billion sale of its U.S. operations to PNC Financial Services Group Inc (PNC.N) - a deal BNP hopes to replicate.

BNP was not immediately available for comment. JPMorgan and Goldman Sachs declined to comment.

Bank of the West, with $99.2 billion of assets as of June 30, ranks as BNP's biggest business outside Europe.

A sale would give Chief Executive Jean-Laurent Bonnafé cash to invest on the continent where the European Central Bank is urging the region's lenders to merge as they have lagged their U.S. and Chinese rivals in profitability and size since the 2008 financial crisis, the sources said.

While centred on California, the 147-year old Bank of the West has retail operations in 19 U.S. West and Midwest states. It was bought by BNP in 1979 and subsequently merged with its local subsidiary, the French Bank of California (FBC).

Bank of the West sells a range of retail banking products and services to individuals, small businesses and corporate clients with a strong presence in specialised financing areas, such as agribusiness and farming.

BIDDING FIELD

To secure a successful sale of the business, BNP would have to overcome a number of challenges, the sources noted.

U.S. President Joe Biden has called for more scrutiny of bank mergers, while the departure of Randal Quarles as the Federal Reserve's vice chair for supervision and uncertainty over Jerome Powell's future as chair has cast doubt on banking consolidation.

Dealmakers, who spoke with Reuters on condition of anonymity, said this leadership void has created an effective hold on the approval of large bank acquisitions by the Fed, making it difficult for bank boards to sanction new transactions.

"BNP needs to find a partner who's willing to fight hard to win regulatory approval," the first source said.

The French lender has long seen PNC as an ideal suitor for Bank of the West, and its sale efforts were emboldened by the purchase price PNC paid for BBVA's U.S. business, valuing it at 20 times its 2019 earnings, the source said.

But with PNC now busy integrating its latest acquisition, BNP is left with a small pool of potential buyers, which include Canadian banks and some regional U.S. players.

Toronto-Dominion Bank (TD.TO) and Bank of Montreal (BMO.TO) are seen as possible suitors alongside Ohio-based KeyCorp (KEY.N), two of the sources said.

TD Bank, with retail operations along the U.S. East Coast, has proceeds available from the $26 billion sale of broker-dealer TD Ameriprise to Charles Schwab Corp (SCHW.N). Chief Executive Bharat Masrani said in May the bank was open for M&A opportunities which made financial sense, with a focus on its existing footprint.

BMO executives have expressed a desire to grow the bank's U.S. presence and would be in a position to add cash to finance a possible deal while KeyCorp would instead need to pursue an all-stock transaction.

Royal Bank of Canada (RY.TO) - which owns City National Bank, the ninth-largest bank in California by deposits - could also express interest in Bank of the West, one of the sources said.

PNC and KeyCorp declined to comment while TD, BMO and RBC were not immediately available.

Reporting by Pamela Barbaglia in London and David French in New York; Editing by Emelia Sithole-Matarise

Our Standards: The Thomson Reuters Trust Principles.

When BNP Paribas, Europe’s largest bank, decided to divest its Bank of the West retail and commercial banking business in the United States, it turned to its long-time counsel at Sullivan & Cromwell. The lawyers in our Financial Services Group advised the bank as it negotiated a $16.3 billion sale of the business to BMO Financial Group in the largest bank M&A deal announced in 2021.

S&C led all law firm advisers on announced bank M&A deals, measured by value, in 2021. We advised on deals totaling more than $52 billion, which represented two-thirds of the bank M&A deals announced last year.

The BNP Paribas deal marks the latest instance of S&C helping an international banking giant redefine its presence in the United States. This year we also advised Japan’s largest bank, Mitsubishi UFJ Financial Group, as it reached an $8 billion deal to sell its U.S. regional bank franchise to U.S. Bancorp. In last year’s largest U.S. bank deal, we advised Spanish bank Banco Bilbao Vizcaya Argentaria in the sale of its U.S. subsidiary to PNC for $11.5 billion. We also advised HSBC in its exit from its U.S. domestic mass market retail banking business through two sales.

S&C stands at the forefront of bank M&A. Our premier banking practice has the versatility and depth of knowledge to advise a wide variety of financial institutions—from some of the world’s biggest to innovative startups—on their most crucial matters spanning regulatory, transactions, litigation and enforcement actions.

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Recent Insights

Does BNP Paribas own Bank of the West?

Bank of the West is an American financial institution headquartered in San Francisco, California, United States. It is a subsidiary of the French international banking group BNP Paribas and has more than 600 branches and offices in the Midwest and Western United States.

When did BNP buy Bank of the West?

In 1979, BNP bought Bank of the West and merged in the French Bank of California. In March 1980, in order to consolidate its position, BNP incorporated the French Bank of California's business into Bank of the West, which enabled BNP to strengthen its presence in California with 50 additional branches.

Which bank bought out Bank of the West?

The parent company of BMO Harris Bank announced its $16.3 billion acquisition of Bank of the West last December. If approved, the deal would expand the Canadian firm's U.S. footprint. The $16.3 billion deal was large enough that federal regulators called a hearing to field comments from members of the public.

Was Bank of the West sold?

The equity offering is a key piece of the financing for Bank of Montreal's $16.3 billion purchase of Bank of the West, which will extend its retail footprint into the western U.S. and bulk up its commercial business.