BNP Paribas SA : BNP Paribas reached an agreement with BMO for the
sale of Bank of the West
BNP Paribas reached an agreement with BMO for
the sale of Bank of the West
BNP Paribas has reached an agreement with BMO
Financial Group for the sale of 100% of its retail & commercial
banking activities in the United States conducted through its
subsidiary Bank of the West, Inc. for a total consideration of 16.3
billion US dollars in cash (the "Transaction")
The Transaction is expected to formally close
during the course of 2022, upon customary condition precedents,
including the approval of the relevant antitrust and regulatory
authorities.
The total agreed consideration amounts to 16.3
billion US dollars (equivalent to approximately 14.4 billion
euros1), to be paid in cash at closing of the Transaction.
The total consideration represents 1.72 times
Bank of the West’s Tangible Book Value2 and 20.5% of BNP Paribas
market capitalisation1, while Bank of the West has contributed an
average of approximately 5% to the Group pre-tax earnings over the
last few years.
The Transaction will generate at closing a
one-off capital gain (net of taxes) estimated at approximately 2.9
billion euros2 and a positive impact on BNP Paribas Group’s Common
Equity Tier 1 (CET1) ratio of approximately 170 basis points2.
In terms of distribution policy to shareholders,
the Group intends 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 (“EPS”).
As an indication, a share buy-back program of approximately 4
billion euros would fully neutralize the EPS dilution (under
current assumptions and based on 17 December 2021 closing share
price, that is 56.17 euros)2.
Net of these share buy-backs, the increase in
the Group’s CET1 ratio would be of approximately 110 basis
points2.
BNP Paribas intends to redeploy the remaining
proceeds (equivalent to approximately 7 billion euros in capital
release2), over time and in a very disciplined way, with the aim of
improving long-term value creation through acceleration of organic
growth, in particular in Europe, targeted investments in
technologies and innovative business models, and bolt-on
acquisitions in value-added businesses.
The Group will present its main strategic axes
as part of the full-year 2021 results release on the 8 February
2022 and detail further its 2025 strategic plan in its Investor Day
scheduled for the 14 March 2022.
BNP Paribas benefits from a long-term presence
in the United-States, and notably a strong Corporate &
Institutional Banking franchise, recently reinforced with the
development of prime brokerage activities. The terms of the
Transaction do not have any significant impact on these businesses.
BNP Paribas will continue to consolidate and further develop its
activities in the United States, as a strategic pillar to better
serve global clients’ needs.
To strengthen its global connectivity and
reinforce its One bank approach, which offers to corporates a
seamless access to BNP Paribas’ global Corporate Banking platform,
the Group will enter into long-term distribution agreements with
BMO, BNP Paribas’ new partner for the purpose of cross-border
cooperation and for the provision of Equipment Finance and Cash
Management solutions in North America.
Jean-Laurent Bonnafé, BNP Paribas Group
Director and Chief Executive Officer, said: “This is a value
accretive transaction for all sides, which emphasizes the quality
of Bank of the West franchise. In the name of BNP Paribas, I would
like to deeply thank all Bank of the West teams for their
achievements and contributions for the development of the Bank.
Moreover, BNP Paribas’ set-up in the United States remains a
strategic pillar for the development of our Corporate and
Institutional franchise. With this transaction, BNP Paribas also
reaffirms its commitment to deliver value to all its
stakeholders.”
- As of December 17, 2021 with a EUR/USD exchange rate of
1.13.
- The preliminary estimation of the impact on Common Equity Tier
1 and on the financial elements was made taking into consideration
the financial statements as of September 30, 2021, the latest
analysts’ consensus and a EUR/USD exchange rate of 1.13. These
estimations will vary from the date of this disclosure up to the
date of closing of the Transaction due to, among other
circumstances and assumptions, changes in the book value, risk
weighted assets and financial results of the companies included in
the Transaction and changes in the EUR/USD exchange rate.
Goldman Sachs Bank Europe and J.P. Morgan
Securities plc served as financial advisors to BNP Paribas SA, also
supported by BNP Paribas Corporate Finance, and Sullivan &
Cromwell LLP served as legal advisor.
Press contactSandrine Romano –
sandrine.romano@bnpparibas.com – +33 6 71 18 23 05
About BNP ParibasBNP Paribas is the
European Union’s leading bank and key player in international
banking. It operates in 68 countries and has more than 193,000
employees, including nearly 148,000 in Europe. The Group has key
positions in its three main fields of activity: Retail Banking for
the Group’s retail-banking networks and several specialised
businesses including BNP Paribas Personal Finance and Arval ;
Investment & Protection Services for savings, investment and
protection solutions ; and Corporate & Institutional Banking,
focused on corporate and institutional clients. Based on its strong
diversified and integrated model, the Group helps all its clients
(individuals, community associations, entrepreneurs, SMEs,
corporate and institutional clients) to realise their projects
through solutions spanning financing, investment, savings and
protection insurance. In Europe, BNP Paribas has four domestic
markets: Belgium, France, Italy and Luxembourg. The Group is
rolling out its integrated retail-banking model across several
Mediterranean countries, Turkey, Eastern Europe as well as via a
large network in the western part of the United States. As a key
player in international banking, the Group has leading platforms
and business lines in Europe, a strong presence in the Americas as
well as a solid and fast-growing business in Asia-Pacific.
About Bank of the
WestHeadquartered in San Francisco, Bank of the West
operates more than 500 branches and offices in 24 states (primarily
in the Western and Midwestern parts of the United States), employs
more than 9,000 team members, and serves nearly 1.8 million
customers. As of June 2021, Bank of the West has a deposit market
share of approximately 3% in the top three states (California,
Colorado, and Oregon), which account for over 80% of its deposits.
Bank of the West markets a very broad range of retail banking
products and services to individuals, small businesses and
corporate clients. It also has strong positions across the United
States in several specialised financing activities, such as marine,
recreational vehicles, and agribusiness. To learn more about Bank
of the West, visit About Us via BankoftheWest.com.
- 20211220_PR_BNPParibas_Agreement_BoW_EN
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