BNPQY BNP Paribas (QX)

By Cristina Roca

BNP Paribas SA said Monday that it has agreed to sell Bank of the West to Bank of Montreal's BMO Financial Group for a total consideration of $16.3 billion in cash.

The sale represents all of BNP Paribas's retail and commercial-banking activities in the U.S. Some 70% of Bank of the West's deposits are in California.

The Wall Street Journal reported that the two companies were in advanced talks earlier Monday.

The French lender said the deal will generate a one-off capital gain, net of taxes, of about 2.9 billion euros ($3.26 billion), and boost its common equity Tier 1 ratio by about 170 basis points.

Separately on Monday, BMO said the deal should be accretive to its earnings per share immediately after closing, and more than 10% accretive in 2024 including cost synergies.

The deal will be funded mainly through excess capital on the combined entities' balance sheet at closing, BMO said. It backed its target capital ratios and target payout range.

BNP Paribas said it intends to implement an extraordinary share buyback to compensate the expected earnings-per-share dilution from the deal. Indicatively, about EUR4 billion would fully neutralize the dilution, it said.

The rest of the proceeds of the deal, estimated at about EUR7 billion, should be redeployed to accelerate organic growth, especially in Europe, make targeted investments and acquire value-added businesses, BNP Paribas said.

The deal is expected to close in 2022.

Write to Cristina Roca at cristina.roca@wsj.com

(END) Dow Jones Newswires

December 20, 2021 02:57 ET (07:57 GMT)

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