BNP Paribas (BNPQY.PK, BNP.L) agreed to sell its retail & commercial banking activities in the United States to BMO Financial Group (BMO, BMO.TO) for a total consideration of US$16.3 billion in cash, the companies said in a statement.
BNP Paribas is conducting its retail & commercial banking activities in the United States through its subsidiary Bank of the West Inc, which was founded in 1874.
The transaction is expected to formally close during the course of 2022.
BNP Paribas plans to make an extraordinary distribution in the form of share buy backs following the closing of the Transaction, to compensate the expected dilution of the Earning per share.
BNP Paribas intends to redeploy the remaining proceed, which is equivalent to about 7 billion euros in capital release.
BMO expects to fund the Bank of the West transaction primarily through excess capital on the combined entities balance sheet at closing, including an estimated C$3.8 billion from Bank of the West and C$13.5 billion from BMO, which includes the benefit from the sale of BMO’s EMEA asset management business and internal capital generation to the estimated closing date.
As part of the transaction, BMO does not plan to close Bank of the West branches, is committed to retaining front-line Bank of the West branch employees, and enabling career development opportunities throughout BMO’s North American footprint.
BMO and BNP Paribas will enter into a long-term distribution agreement for the provision of Equipment Finance and Cash Management solutions to BNP Paribas’ customers in North America.
The transaction, which has been approved by the BMO and BNP Paribas Boards of Directors, is expected to close by the end of calendar 2022, subject to customary closing conditions, including regulatory approvals. Upon closing, BMO intends to merge Bank of the West into BMO Harris Bank N.A.