BNP Paribas could offload Bank of the West in $15B deal

Dive Brief:

BNP Paribas is considering selling its U.S. subsidiary Bank of the West in a deal that could value the business at $15 billion, Reuters reported Monday, citing anonymous sources with knowledge of the matter. A Bloomberg Intelligence analyst estimated the figure between $12 billion and $13 billion.
The list of possible suitors includes TD, Bank of Montreal and KeyBank, two of Reuters' sources said.
The French bank has viewed PNC as an ideal potential buyer, Reuters reported. BNP Paribas even enlisted JPMorgan to advise it, according to the publication. JPMorgan represented BBVA when the Spanish bank sold its U.S. retail arm to PNC last year for $11.6 billion, indicating BNP Paribas may want to emulate that deal. Goldman Sachs is also helping the French lender gauge the interest of potential bidders, Reuters and Bloomberg reported.

Dive Insight:

BNP Paribas CFO Lars Machenil told Bloomberg in October the bank was "keeping its eyes open" for deals involving its U.S footprint.

A move to offload Bank of the West — BNP Paribas’ largest banking footprint outside Europe, with 531 branches and $99.2 billion in assets, as of June 30 — would follow three multibillion-dollar exits from U.S. retail banking by foreign lenders in the past 12 months.

PNC announced its acquisition of BBVA USA one year ago this week, in a deal that helped the Pittsburgh lender leapfrog Truist and U.S. Bank to become the nation’s fifth-largest bank.

U.S. Bank in September said it would pay $8 billion to acquire MUFG Union Bank, the U.S. retail arm of Japanese automaker Mitsubishi — re-asserting the Minneapolis bank’s hold on the No. 5 spot.

And HSBC in May agreed to sell 80 of its 148 U.S. branches to Providence, Rhode Island-based Citizens Bank, and 10 West Coast branches to Los Angeles-based Cathay Bank. The British bank said it would retain and repurpose 20 to 25 locations as international wealth centers and close the remaining 35 to 40 branches.

PNC may be too occupied integrating BBVA USA’s systems to compete for Bank of the West, leaving several players in line. TD, for example, has funding on hand from its $26 billion sale of TD Ameritrade to Charles Schwab, finalized in October 2020. “With respect to major mergers and acquisitions in the United States, we’re very open,” TD CEO Bharat Masrani told Bloomberg in March.

Bank of Montreal, which has its own U.S. footprint headquartered in Chicago, also could offer BNP Paribas a cash deal, Reuters reported. Cleveland-based KeyBank, on the other hand, would have to go the all-stock route. Royal Bank of Canada, whose Los Angeles-based subsidiary City National Bank is already California’s ninth-largest bank by deposits, may also express interest in Bank of the West, another Reuters source said.

BNP Paribas could reinvest the proceeds from a Bank of the West sale in fellow European banks. The European Central Bank has pressed lenders there to merge to compete with U.S.- and China-based rivals. BBVA on Monday, in one move toward that directive, bid $2.6 billion to buy out the 50.2% of Turkish lender Garanti that it doesn’t already own.

The timeline for a Bank of the West spinoff, however, may be stalled by a leadership vacuum at the Federal Reserve, which, after December, will have a vacancy in the role supervising bank regulation. The central bank’s vice chair of supervision, Randal Quarles, announced his exit last week, effective next month. That could effectively pause large bank transactions until new leadership is in place.

BNP Paribas bought Bank of the West in 1979 and merged it with its subsidiary, the French Bank of California and, later, with United California Bank.