BNP Paribas is considering selling or spinning off one of its two U.S. banking subsidiaries as it aims to boost capital.
The French banking giant said Wednesday that it is exploring "alternatives" for the $18.9 billion-asset First Hawaiian Bank, "including a possible sale or initial public offering."
A sale or spinoff could help offset the capital hit BNP Paribas will take this quarter following the write down of goodwill related to its Italian corporate and consumer banking unit. That writedown is expected to reduce fourth-quarter earnings by about $983 million, the bank said Wednesday.
A sale or spinoff could also accelerate the bank's timeline for achieving a Tier 1 capital ratio of 11.5% recommended by European regulators. The European Central Bank has recommended that it hit that target by 2019, but BNP Paribas said it could reach it by mid-2017, depending on what happens with First Hawaiian.
BNP Paribas acquired a 45% stake in Honolulu-based First Hawaiian in 1998 and bought the remaining stake in 2001. It also owns the $74 billion-asset Bank of the West in San Francisco.
First Hawaiian, Hawaii's oldest bank, has 57 branches in its home state as well as five in the Northern Mariana Islands and Guam, both U.S. territories.
It earned $172.5 million through the first nine months of 2015, according to the Federal Deposit Insurance Corp., up 4.6% from the same period in 2014.
At Sept. 30, its return on equity was 8.53% and its efficiency ratio was 45.86%.
If BNP Paribas spins off First Hawaiian it would be the second European bank to part with a U.S. subsidiary in order to meet heightened capital requirements. The $135 billion-asset Citizens Financial Group in Providence is also being spun off from its parent, Royal Bank of Scotland.