(Toronto) The Bank of Montreal has obtained the green light from American regulators to conclude its acquisition of the Californian bank Bank of the West from the hands of BNP Paribas for 16.3 billion US dollars.
The agreement, which is expected to close on 1er February, will see a major expansion of Bank of Montreal’s presence in the U.S. market, where many of Canada’s largest banks are seeking growth.
Bank of Montreal, which already has assets valued at about $165 billion and 520 branches in nine US states, will add some $92 billion in assets and more than 500 branches in 20 states. It will thus become the thirteenth largest commercial bank in the country, according to the Office of the Comptroller of the Currency (OCC), responsible for regulating and supervising banks in the United States.
The acquisition will see Bank of Montreal welcome nearly 1.8 million new customers — individuals, SMEs and large corporations, as well as customers for its wealth management services. In addition, Bank of the West’s more than 9,300 employees will join the company.
In approving the deal, the OCC and the Federal Reserve Board cited steps taken by Bank of Montreal to better serve customers as contributing factors to the decision, along with financial stability and competitive assessments.
BMO announced a US$40 billion community support agreement in November, which commits it to lending to low- and middle-income households, minorities, small businesses and community development opportunities. The bank has also pledged not to close any branches, in addition to having eliminated or reduced several fees, including those for insufficient funds.
“We are thrilled to bring BMO and Bank of the West together to continue building a leading North American bank, with a common goal of progress for our customers, our employees, our communities and the planet,” said in a press release. Bank of Montreal CEO Darryl White.
The all-cash deal, announced in December 2021, comes after Canada’s banking regulator increased the amount of capital banks must retain as financial risks increase, leading to Bank of Montreal to announce a common share offering of approximately $3.15 billion in December.
TD Bank is still battling to win regulatory approval for its $13.4 billion deal to take control of Tennessee-based First Horizon.
In endorsing the deal with Bank of Montreal, Federal Reserve Board Vice Chairman Lael Brainard raised concerns about the increase in the number of banks in the $250 billion to $700 billion range. , which Bank of Montreal will join with this transaction.
Mme Brainard said she was encouraged that the board was working with the Bank of Montreal to improve safeguards in the event of financial difficulties, and that the board is also undertaking a serious review of the capital requirements of large banks.
In announcing the regulatory approvals, the Bank of Montreal also indicated that Nandita Bakhshi and Claudia Fan Munce, currently directors of Bank of the West, would join the board of directors of the American holding company of the Bank of Montreal.