Bank of Montreal has agreed to buy Bank of the West in San Francisco.
Bank of Montreal said in a press release Monday that it will pay $16.3 billion in cash for the $105 billion-asset unit of BNP Paribas. The deal, which priced Bank of the West at 150% of its tangible book value, is expected to close by the end of 2022.
Bank of the West, which has $56 billion of loans and $89 billion of deposits, would be merged into the $162 billion-asset BMO Harris in Chicago. Bank of Montreal has no plans to close any Bank of the West 514 branches.
BMO said it will raise about $2.1 billion of common equity to help fund the acquisition. It will also use capital raised from selling its EMEA asset management business.
“This acquisition will add meaningful scale, expansion in attractive markets, and capabilities that will enable us to drive greater growth, returns and efficiencies,” Darryl White, BMO Financial Group’s CEO, said in the release.
“Bank of the West’s presence in many of the largest and fastest growing markets in the U.S. provides an ideal and complementary commercial and retail banking platform to fuel BMO’s growth,” Nandita Bakhshi, Bank of the West’s CEO, said in the release.
BMO said it expects the transaction to be immediately accretive to its earnings per share at closing and 10% accretive in 2024.
The company expects to incur $1.3 billion of merger-related expenses. It plans to cut 35% of Bank of the West’s annual noninterest expenses, or roughly $664 million.
About 55% of the expense cuts will involve centralized overhead and shared services, while 30% will be tied to IT efficiencies.
Bank of the West is the latest foreign-owned bank to be sold. Others include BBVA Compass, MUFG Union Bank, Bank Leumi USA and HSBC USA.
BMO Capital Markets, Morgan Stanley; Wachtell, Lipton, Rosen & Katz; and Osler, Hoskin & Harcourt advised Bank of Montreal. Goldman Sachs; JPMorgan Chase; and Sullivan & Cromwell advised BNP Paribas.