One of Canada’s largest banks has bought itself a really big Christmas present. The Bank of Montreal and it’s BMO Financial Group has an agreement in principle to acquire the France-based BNP Paribas’ Bank of the West for $16.3 Billion. The purchase-price is by far the largest in the 200 year old Montreal-based bank’s history, and would extend BMO’s presence across much of the U.S. and especially in California.
The Bank of Montreal already has a presence in the U.S. Midwest after acquiring Marshall & Isley in 2011, and Harris Bankcorp back in the 1980’s. Based on assets, Bank of Montreal is ranked as the eighth largest in North American, and ranked fourth among Canada’s six major chartered banks. Bank Of The West has 600 branches across 18 western and mid-west states. The bank is currently based in San Francisco, so its strongest commercial presence is in California. The acquisition should close early next year, and add nearly two million customers for BMO.
Ernie Johannsen heads up the U.S. Business for Bank of Montreal. She says the Bank Of The West deal is a good fit with BMO’s broader vision. The 204 year old Montreal-based bank has always maintained a strong agricultural and rural presence. Relative to its commercial business, BMO views agriculture and agri-food as an integrated business across North America.
“And that’s really going to accelerate our commercial businesses, technology, they have good agricultural capabilities, and protein, and wines. They’ve got a great reputation. And that’s also been really important in the alignment of this deal, building a contiguous market. Our perspective is, this is a growth story. Growth for a Canadian business that has been really performing extremely well, and our U.S. business.”
European banks have been gradually retreating from the US market, finding it tough to compete with big nationwide lenders like JPMorgan Chase, Bank of America, and Wells Fargo. Conversely, Canadian financial institutions have always maintained a strong presence in the American commercial banking and financial investment community. Johannsen says the decision to acquire Bank Of The West was a natural next-step to accelerate the Canadian bank’s expansion plan.
“We’ve been looking at Bank Of The West for a while. We see this as a natural, logical next-step in our North American growth strategy. It’s around accelerating our growth trajectory in the U.S., and it’s the right time for this. We have been building a building a very, very strong franchise in the U.S.”
Bank of Montreal has pledged to keep most, if not all, of Bank Of The West branches open, and the transaction is scheduled to close early in 2022.