With this operation, the French banking group withdraws from the US market of the retail bank, which it had invested more than forty years ago.
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BNP Paribas has finished with its conquest of the American West. The French banking giant announced, Monday, December 20, having entered into an agreement with the Bank of Montreal (BMO Financial Group), to transfer its California subsidiary Bank of the West for $ 16.3 billion (14.4 billion euros), in cash. This sum represents some 20% of BNP Paribas’s market capitalization, while Bank of the West contributed on average to about 5% of the Group’s recent years before tax.
BNP Paribas thus ends an adventure of more than forty years. Bank of the West, headquartered in San Francisco, fell in 1979 in the Escarcelle of the French Bank. This then redeems a structure of about forty agencies, in order to obtain a deposit base to finance credits to French companies in America. Local California local bank, it becomes successive acquisitions a regional bank, tour to individuals and SMEs, located in the West and the American Midwest. Fourth Regional Bank in California Deposits, it claims 1.8 million customers and a strong presence with Napa Valley’s winemakers.
Consolidation Movement
However, low interest rates have made US regional banks, which have embarked on a consolidation movement to achieve savings and compete with the retail banking activities of the major institutions of Wall Street. With this operation, BNP Paribas retires from the US retail banking market, where it was barely facing larger and better capitalized rivals, and will focus its strength in Europe. The establishment remains present in the United States, New York, in the Financing and Investment Bank.
Other foreign banks have initiated this movement before it: in 2020, Spanish BBVA sold its US banking at Pittsburgh PNC Group for $ 11.6 billion and, in September, Japanese Mitsubishi UFJ Financial Group decided to sell the branch dedicated to individuals in his US subsidiary, Mufg Union Bank, in US Bancorp, for $ 8 billion.
BNP Paribas has already indicated how it would use these new financial returns. It plans to carry out an extraordinary distribution in the form of repurchase of shares after the completion of the operation, in 2022, “in order to offset the expected dilution of the net profit per share,” indicates the establishment in a statement, whereas The sale of Bank of the West will result in a drop in yield for shareholders. “As an indication, a share buyback program of about 4 billion euros totally neutralize [this] dilution,” she says.
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