BNP Paribas said to explore sale of Bank of the West

The French banking giant BNP Paribas is exploring the sale of its U.S. subsidiary, Bank of the West, as it looks to withdraw from retail banking in the United States, Reuters reported Monday.

The largest European bank by assets may try to unload the San Francisco-based franchise in a deal that could value it at approximately $15 billion, Reuters reported, citing three unnamed sources.

The French company is working with advisers to prepare the U.S. arm to be sold, the sources told Reuters.

If BNP Paribas retreats from the highly competitive U.S. retail banking market, it would become the fifth foreign-owned company to do so in the past 12 months. Since November 2020, Banco Bilbao Vizcaya Argentaria in Spain, HSBC Holdings in London, Mitsubishi UFJ Financial Group in Japan and Bank Leumi in Israel have pulled the plug on most or all of their U.S. retail operations.

The withdrawals come at a time when competition in retail banking is stiff, technology investments are expensive and growth prospects are increasingly tied to scale.

BBVA sold most of its U.S.-based businesses to Pittsburgh-based PNC Financial Services Group in an $11.6 billion deal that closed in June. HSBC is selling the majority of its U.S. branches to Providence, Rhode Island-based Citizens Financial Group and Los Angeles-based Cathay Bank, and turning the remaining 20 to 25 branches into international wealth centers to boost returns.

MUFG is selling its U.S. subsidiary, MUFG Union Bank in San Francisco, to U.S. Bancorp as part of an $8 billion cash-and-stock deal that is expected to close during the first half of 2022.

In September, Valley National Bancorp in New Jersey said it had agreed to buy New York-based Bank Leumi USA for $1.15 billion in cash and stock.

BNP Paribas, which acquired Bank of the West in 1979, declined to comment on Monday’s report. In past years, BNP officials have said that the U.S. market has strategic importance to the Paris-based company.

Even if BNP wants to sell its U.S. retail unit, it may be difficult to find a buyer that is well positioned to complete an acquisition. Bank of the West has nearly $100 billion of assets and operates in 19 states in the West and Midwest, which could make it hard for many regional banks to swallow.

Meanwhile, megabanks such as JPMorgan Chase, Bank of America and Citigroup are already so large that any bank acquisitions would likely push them over the federally imposed 10% cap on the nation’s deposits. Wells Fargo, the fourth-largest U.S. bank, continues to operate under an asset cap imposed by the Federal Reserve.

According to Reuters, potential bidders for Bank of the West include at least two Canadian banks — Toronto-Dominion Bank and Bank of Montreal — and Cleveland-based KeyCorp.

Toronto-Dominion and KeyCorp declined to comment on the report, and Bank of Montreal did not immediately respond to a request for comment.