BNP Paribas leaves US retail banking with sale of $ 16.3 billion

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Bye. Farewell. Don’t let the door knock on you on your way out.

France’s largest bank, BNP Paribas, on Monday became the latest in a line of European lenders to leave the US retail banking space, one after another failing to impress US consumers .

Lossy games

Many foreign banks have entered the US retail banking market, attracted by the large margins of US lenders and the robust growth of the world’s largest economy. But European banks in particular have underperformed, unable to match the brand prestige – let alone the talent and client lists – of JPMorgan and Bank of America.

Spain’s BBVA bailed out last year when it sold its US operations to Pittsburgh bank NPC for $ 11.6 billion. Then HSBC, the British global banking giant that is a powerhouse in Asia, sold its North American unit to Citizens Bank earlier this year. On Monday, BNP Paribas – the French bank’s titan with a market capitalization of $ 70 billion – became the latest to throw in the towel:

  • BNP has agreed to sell Bank of the West in San Francisco to Canada’s Bank of Montreal (BMO) for $ 16.3 billion.
  • BMO – which will attempt to replicate the American success of its Canadian rival Toronto-Dominion (TD Bank as it is popularly called) – adds more than 500 bank branches and wealth management offices with 1.8 million customers mainly based in an economically resilient California.

BMO shares fell 2% on morning trading on the Toronto Stock Exchange, with some analysts concluding the purchase price was a bit steep. But BMO said the deal would immediately boost profits, despite merger costs of $ 1.3 billion.

Exception to the rule: A European bank that has proven the asterisk (yes, it’s the Spanish asterisk): the Spanish Santander. The bank’s risky auto credit business, Scusa, has seen astronomical growth due to Santander’s strategy to not compete with the big American banks. Instead, it targets customers with lower creditworthiness that have been rejected by traditional banks. Santander’s operation in the United States now makes more profit than its units in Spain, Brazil and the United Kingdom.

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