EXCLUSIVE-BNP hires advisers to explore $15 bln Bank of the West sale – sources

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* JP Morgan and Goldman Sachs are working with BNP – source

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*Discussions still in early stage – source

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* PNC, Canada’s TD and BMO are seen as potential customers

* Any deal will face US regulatory challenges

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LONDON, Nov 15 (Businesshala) – BNP Paribas is working with advisors to assess sales of its US arm Bank of the West as it struggles to compete with larger and better-capitalized rivals in US retail banking. Wants to step back from the market, sources told Businesshala.

The French lender, which overtook British rival HSBC last year to become Europe’s biggest bank by assets, is looking to participate in a deal with its California-based retail banking subsidiary that could be valued at around $15 billion, three Said talk with knowledge of the sources.

Sources said JP Morgan and Goldman Sachs are preparing the business for sale and are working closely with BNP to ascertain interest from potential bidders.

He added that talks are still in the early stages and no deal has been finalised.

JPMorgan was the first to secure a mandate from BNP during the summer, one of the sources said, representing Spain’s BBVA in the recent $11.6 billion sale of its US operations to PNC Financial Services Group Inc. A deal BNP hopes to replicate.

BNP was not immediately available for comment. JPMorgan and Goldman Sachs declined to comment.

The Bank of the West, with assets of $99.2 billion as of June 30, is BNP’s largest business outside Europe.

A sale would give chief executive Jean-Laurent Bonafe cash to invest on the continent where the European Central Bank is urging lenders in the region to merge as they have seen their American and Chinese growth in profitability and size since the 2008 financial crisis. The rivals have been left behind, the sources said.

While focused on California, the 147-year-old Bank of the West operates 531 branches, primarily in the US West and Midwest. It was purchased by BNP in 1979 and later merged with its local subsidiary, the French Bank of California (FBC).

Sources said BNP would have to overcome several challenges for successful sale of the business.

US President Joe Biden has called for more scrutiny of bank mergers, while the departure of Randall Quarles as Federal Reserve vice chairman for supervision and uncertainty over the future of Jerome Powell nL1N2RZ1IC has cast doubts on banking consolidation.

Dealmakers, who spoke with Businesshala on condition of anonymity, said this leadership vacuum has put an effective hold on approval of large bank takeovers by the Fed, making it difficult for bank boards to approve new transactions.

bidding area

The source said that BNP has long viewed PNC as an ideal suitor for Bank of the West, and that its selling efforts have been bolstered by the purchase price paid by PNC for BBVA’s US business. 20 times the earnings of 2019.

But with PNC now busy integrating its latest acquisition, BNP is left with a small pool of potential buyers, which include Canadian banks and some regional US players.

Toronto-Dominion Bank and Bank of Montreal are seen as potential suitors along with Ohio-based KeyCorp, two sources said.

TD Bank, with retail operations along the US east coast, was open to M&A opportunities from the $26 billion sale of broker-dealer TD Ameriprise, Charles Schwab Corp chief executive Bharat Masrani said in May. Financials make sense, with a focus on its current footprint.

BMO officials expressed a desire to increase the bank’s US presence and that the bank would be in a position to offer BNP a cash deal, unlike KeyCorp, which would instead require an all-stock transaction to proceed.

Royal Bank of Canada – which owns Citi National Bank, California’s ninth largest bank by deposits – may also express interest in Bank of the West, a source said.

PNC, TD, BMO, KeyCorp and RBC were not immediately available for comment.

Reporting by Pamela Barbaglia in London and David French in New York; Editing by Amelia Sithol-Mataris


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