BMO to Acquire BNP Paribas’ U.S. Unit for $16 Billion

Bank of Montreal announced its plans to purchase BNP Paribas’ U.S. Unit, Bank of the West, at a price of $16.3 billion. This is the lender’s largest deal ever, enabling it to expand its presence in the world’s most developed economy.

Thanks to the deal, BMO will increase its footprint in California, adding 1.8 million new customers, as well as enlarging the United States’ contribution to total adjusted pre-provision, and pretax profits to 44% from 36% in the fiscal year of 2021.

According to analysts, the deal is positive for Canada’s fourth-largest lender, which has already operated in the U.S. since 1984. However, the deal comes at a point where President Joe Biden’s administration is forcing regulators to be stricter with mergers after concerns that declining competition is negatively affecting everyday Americans.

Darryl White, CEO of BMO, told investors that he doesn’t see a sensible reason the bank won’t be allowed to expand by U.S. regulators. 

The acquisition will help BMO to additionally decrease its low exposure to the Canadian household sector, while simultaneously profiting off the prospective U.S market, as per Edward Jones analyst James Shanahan.

Executives at BMO say they anticipate significant revenue synergies after the deal, which is yet to be evaluated in the upcoming weeks.