French international banking group BNP Paribas sells Bank of the West for $16 billion
- ByStartupStory | December 21, 2021
BNP Paribas said that it will be selling US unit Bank of the West to Canada’s BMO Financial Group for $16.3 billion in a deal that will give France’s biggest bank a huge step up in firepower for deals and buybacks. The sale will leave BNP Paribas focused on Europe with a growing stature among the biggest investment banks. The sale represents all of BNP Paribas’s retail and commercial-banking activities in the U.S. Some 70% of Bank of the West’s deposits are in California.
The French lender said the deal will generate a one-off capital gain, net of taxes, of about 2.9 billion euros ($3.26 billion), and boost its common equity Tier 1 ratio by about 170 basis points. BMO said the deal should be accretive to its earnings per share immediately after closing, and more than 10% accretive in 2024 including cost synergies.
BNP Paribas said it intends to implement an extraordinary share buyback to compensate for the expected earnings-per-share dilution from the deal. Indicatively, about EUR4 billion would fully neutralize the dilution. The company added, The rest of the proceeds of the deal, estimated at about EUR7 billion, should be redeployed to accelerate organic growth, especially in Europe, make targeted investments and acquire value-added businesses.
The WSJ reported earlier on 20th December that the two companies were in advanced talks.
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