BNP Paribas, the largest listed bank in France, announced that it has received all the necessary regulatory approvals to proceed with its previously announced sale of Bank of the West to Bank of Montreal (BMO). The transaction is expected to close on February 1st, 2022. This $16.3 billion deal will be BMO’s largest acquisition ever, allowing the Canadian lender to double its presence in the United States and providing BNP Paribas with a significant boost in financial firepower for future deals.
The acquisition is expected to offer BMO a large-scale presence in California, driving customer growth in a key and lucrative market in the United States. Once the deal is closed, it will bring nearly 1.8 million commercial, retail, wealth management, and business banking customers, as well as over 9,300 Bank of the West employees, to BMO.
This deal will also unlock 11 billion euros of capital for BNP Paribas, with 4 billion of that amount being returned to shareholders via a share buyback that could take place in the second quarter of this year. Canadian banks have been accelerating their expansion into the more fragmented US market, helped by billions of dollars in excess capital. They are now looking to tap growth opportunities in new North American markets, away from their largely saturated home turf.
Last year, rival Toronto-Dominion Bank Group announced a deal to buy First Horizon Corp for $13.4 billion in cash to expand its footprint in the southeastern United States. These acquisitions are part of a trend where Canadian banks are looking to expand their operations and tap into growth opportunities in new markets.
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